Good Morning, Vietnam

We’re optimistic on Vietnam given its range of fundamental and geopolitical tailwinds.

Vietnam is a frontier market star. While it is often overshadowed by continental heavyweights China and India, or more established emerging markets such as Indonesia and Malaysia, Vietnam in our view is one of the best structural growth stories in the developing world.

Generally, frontier markets are countries with smaller, less liquid markets that often have reduced operational capabilities and limited foreign investor access. Vietnam has bucked this trend. A key recipient of foreign direct investment (FDI), Vietnam stands out among its peers as a large, more liquid market with 56 companies that have a market cap greater than $1 billion.¹

Resilient export economy

Thanks to a sustained export boom fueled by FDI, Vietnam is a well-positioned manufacturing hub, benefiting from supply chain relocations due to U.S.-China trade tensions. Attracting basic industries away from China and other emerging markets, Vietnam is increasingly moving into higher-value industries such as LED screen production. Substantial road, airport and seaport transportation infrastructure is being rapidly upgraded to cater to increasing export demand.


Expanding, skilled workforce

Unlike other frontier markets, Vietnam benefits from shifting demographics and a large, highly skilled, English-speaking labor force. With a population approaching 100 million, Vietnam’s young workforce and competitive wages help cement its place as a global manufacturing hub. While other frontier markets face negative demographic headwinds, we believe Vietnam may be positioned to mature through a bull cycle of productivity.


Fertile ground for active managers

Vietnam provides an attractive environment for active managers to find quality growth companies. In general, company disclosure across frontier markets is limited, and analyst coverage is much lower than in developed or emerging markets. This provides opportunities for well-resourced active managers focused on fundamental research to add value.

Our expertise and on-the-ground research allow us to dig deeper to understand how companies earn their profits, what the key growth drivers are and where their customers originate. We believe there are exciting growth opportunities across Vietnam including a logistics company that is benefitting from the country’s growing export prowess and a telecom company prospering in the growing broadband market. We believe the characteristics of compelling world-class businesses are consistent regardless of geography. Good companies worldwide share common traits: competitive position, capital allocation, capital structure, cash flow, and character.

John Paul Lech
Portfolio Manager
Matthews Asia

1Bloomberg as of June 10, 2022.




The views and information discussed in this report are as of the date of publication, are subject to change and may not reflect current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. Investment involves risk. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in small- and mid-size companies is more risky and volatile than investing in large companies as they may be more volatile and less liquid than larger companies. Past performance is no guarantee of future results. The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews Asia and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information.