Vietnam's economy weathers global headwinds with trade surplus

Dynam Capital's monthly investor report indicates Vietnam's economic resilience, with exports and imports increasing 13% and 18.6% year-over-year, respectively, resulting in a $3.8 billion trade surplus for the first four months of 2025. Despite a 17% stock market drop following tariff announcements, the market rebounded, supported by strong banking earnings and positive AGM developments, with trading volumes exceeding $1 billion per day. Registered FDI increased by 39.9% to $13.8 billion, and VietNam Holding Limited's (VNH) fund performance increased by 8% as of May 14, outperforming the VNAS index by approximately 6% over five years.

Analysis

Vietnam's economy demonstrated notable resilience in early 2025 amidst global geopolitical tensions, evidenced by a $3.8 billion trade surplus in the first four months, driven by a 13% year-on-year increase in exports and an 18.6% rise in imports. Despite a significant 17% stock market downturn in April following U.S. tariff announcements, the market exhibited a swift recovery, buoyed by strong banking sector earnings and positive outcomes from annual general meetings, with daily trading volumes surpassing $1 billion. This resilience is further underscored by a substantial 39.9% year-on-year increase in registered foreign direct investment (FDI), amounting to $13.8 billion, signaling continued investor confidence and Vietnam's attractiveness for supply chain diversification. VietNam Holding Limited (VNH), managed by Dynam Capital, mirrored this positive narrative, reporting an 8% fund performance increase as of May 14 and outperforming the Vietnam All Share Index (VNAS) by approximately 6% on a compound basis over five years, after fees and FX impacts. VNH's investment strategy remains focused on long-term growth themes such as sustainability, logistics, and consumption, underpinned by Vietnam's urbanization and expanding middle class, with a strong emphasis on ESG factors, particularly relevant as Vietnam seeks to enhance exports to the European Union.

Key Decisions for Investors

• Investors should consider Vietnam's robust export growth, strong FDI inflows, and resilient domestic demand as key indicators supporting a positive outlook for Vietnam-focused assets, despite potential short-term volatility from global trade policies.
• Given VietNam Holding Limited's consistent outperformance and strategic alignment with long-term growth themes like sustainability, logistics, and consumption, along with its emphasis on ESG principles, it warrants consideration for portfolios seeking exposure to Vietnamese equities, particularly in the small and mid-cap sectors.
• Monitoring developments in international trade relations and their impact on Vietnam's export-oriented economy, alongside tracking banking sector performance and market liquidity, will be crucial for navigating investment decisions in the Vietnamese market.