Vietnam Holding (VNH) said Vietnam's investment case continued to strengthen during June, as many of the country's highest-quality listed companies remained valued well below what the investment manager believes their fundamentals justify.
The company highlighted continued strong economic momentum in Vietnam, with second-quarter gross GDP growth of 8.2%, first-half exports rising 21.0% and June retail sales increasing almost 14.8%. Registered foreign direct investment reached a record US$34.7 billion, while manufacturing activity remained in expansion territory.
International recognition of Vietnam's economic progress also continued to build. The World Bank reclassified Vietnam as an Upper Middle Income economy from 1 July, while the IMF raised its 2026 economic growth forecast to 7.5%. Standard Chartered expects growth of 9.5% this year. Meanwhile, Vietnam is expected to be promoted to FTSE Russell Secondary Emerging Market status in September.
Despite the strong macroeconomic backdrop, the company noted that foreign portfolio investors continued to sell Vietnamese equities, even as multinational companies committed record levels of investment into the country's manufacturing sector. It said this disconnect has left many high-quality businesses trading on subdued valuations despite robust earnings growth expectations.
The company added that inflation eased during June as lower oil prices filtered through to consumers, improving the outlook for interest rates. Second-quarter corporate earnings are also expected to increase by about 18-20%.
The company's net asset value (NAV) declined 0.3% during June as markets traded largely sideways ahead of the reporting season. However, the portfolio continues to focus on companies with strong balance sheets, clear earnings visibility and structural growth opportunities, while gradually increasing exposure to larger, more liquid businesses.
View from Vox
Vietnam Holding continues to argue that the gap between Vietnam's economic performance and equity market valuations remains unusually wide. With economic growth, corporate earnings and foreign direct investment all strengthening, the manager believes patient investors could benefit if market sentiment eventually catches up with the country's underlying fundamentals.