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Research Insights

Strategy Reports

Viewfinder 2026: Vietnam in self-drive mode

Viewfinder 2026: Vietnam in self-drive mode

Our last strategy book (‘Flexing the bamboo’) was released at a time of extreme uncertainty with US tariffs dominating dialogue. Just six months later and you will struggle to see many tariff references in this report or hear mention of them in the market. Vietnam has pivoted quickly to a domestic agenda with emphasis on the private sector, legislative change, infrastructure building, and administrative and Governmental overhaul. We forecast this will provide 7.6% GDP growth next year. There are a host of upcoming catalysts which give us confidence that the 2025 bull market will continue. We have a base case Index target of 1,958 in 2026 but see the potential for this to overshoot.

Macro & Market Insights

Softening demand but rising inflation strains monetary outlook

Softening demand but rising inflation strains monetary outlook

Sector Insights

Real Estate: Resilience intact, tariff fears overstated

Real Estate: Resilience intact, tariff fears overstated

We maintain that market concerns over the impact of tariff on IP developers are overstated. Vietnam’s resilience, supported by legal reforms, rising infrastructure investment, and an improving trade outlook, continues to reinforce its role as a key mid to long-term FDI destination. This is consistent with the strong 3Q25 results of developers under our coverage, while they also reported renewed FDI interest after the final tariff announcements. We favor SIP, IDC and KBC for their strong fundamentals and proven track record in serving FDI clients. These companies are well-positioned to capture opportunities from the ongoing expansion of Southern Vietnam’s infrastructure.

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2025 Biannual Strategy: Flexing the Bamboo

2025 Biannual Strategy: Flexing the Bamboo

Vietnam was particularly exposed to initial US tariffs. It needs to show all of its core traits of resilience, cultural togetherness, bravery and shrewd negotiation to improve its position. One suspects that the bamboo of its famous diplomacy will be flexed to almost breaking point between the needs of the US and China. We forecast an average tariff rate of 23.4% following negotiations, affording a GDP growth of 6.5% this year and 6.2% in 2026. This will likely be the best in Asia. Our new one-year index target is 1,512 with good stock picking opportunities. Indeed, the potential for better-than-expected tariff negotiations and a September FTSE Russell EM upgrade could lead to euphoria beyond that level.

External momentum stayed firm in November, with exports and imports up 15.1% and 16.0% y/y, FDI disbursements rising 9.5% y/y, and tourism arrivals climbing 15.6% y/y to 19.1mn in 11M25 (117% of pre-COVID levels) and surpassing the full-year record set in 2019. Strong public investment (up 21.5% y/y in November) and a USD1.1bn monthly trade surplus continued to underpin macroeconomic stability despite sequential trade softness. Yet flat retail sales (m/m) slowed annual growth and undershot our full-year expectations, while inflation’s rise to 3.58% y/y, alongside softer domestic demand, suggests a more challenging monetary policy outlook ahead.

GB market FY26-27F: Steering through fiscal momentum

GB market FY26-27F: Steering through fiscal momentum

We expect government bond issuance in FY26 to increase 10% y/y to VND550tn, supported by record public investment and a higher projected fiscal deficit. Rising issuance pressures are driving yields upward, with 5Y and 10Y tenors revised up to 3.3% and 4.0% for year-end 2025 (previously 3.2% and 3.8%). Yields are projected to rise further to 3.5% and 4.2% in 2026, and 3.6% and 4.3% in 2027, while remaining comfortably below the prevailing policy rate of 4.5%. We maintain O/N interbank rate estimates at 4% for end-FY25 but raise forecasts to 4% (from 3.5% previously) for end-FY26-27, driven by continued strong liquidity demand for credit expansion & FX pressures. SBV continued to provide net OMO injections at extended tenors supporting seasonal year-end demand.

Autos: EV-led growth, but profitability still lagging

Autos: EV-led growth, but profitability still lagging

Vietnam’s 10M25 auto sales vol. advanced 29% y/y – led by VinFast’s stellar momentum while other incumbents rose 7% y/y. In 3Q25, re. motorbike vol., it grew 8% y/y supported by strong e-2W growth, while Honda dropped 7% y/y. We estimate 4Q25 auto vol. to decline 2% y/y on a high base, implying FY25 growth of 19% y/y. For FY26/27, we forecast 17%/16% y/y growth driven by VinFast, with other incumbents growing modestly 5%/6% y/y. Honda motorbikes sales are forecast to fall 11%/4% y/y in FY26/27 due to market share loss to EVs. We are broadly cautious on the sector at current levels. This said, VEA (Add) looks undervalued based, in particular, on its attractive dividend yields. We have Hold ratings on each of for DRC and HAX (up from Reduce); these look fairly valued.