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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.

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.

Macro & Market Insights

Reform progress toward FTSE EM inclusion

Reform progress toward FTSE EM inclusion

The Interim Country Classification - Mar 2026 will be released after the US market closes on 7 Apr, 2026. This important announcement will determine whether Vietnam is included in the FTSE EM index baskets, as scheduled for Sep 2026. Vietnam is advancing reforms to keep the upgrade on track, marking a key turning point that could attract stronger passive and active foreign inflows while enhancing its investment appeal. At a projected FTSE weighting of 0.22%–0.34%, Vietnam could attract USD313mn–485mn in passive inflows, plus additional active inflows, with many large, liquid blue chips likely to benefit from EM index inclusion.

CPI forecast revised upward on higher transport cost

CPI forecast revised upward on higher transport cost

Robust Tet holiday demand, particularly in food, pushed Vietnam’s CPI to 3.35% y/y in Feb-26 (1.14% m/m, highest level since Feb-21), from 2.53% in January, above our 3.1% call. 2M26 CPI averaged 2.94% y/y, below our upwardly revised 4.3% forecast (up 40bps) and the SBV’s 4.5% band. We expect March inflation to rise 4.11% y/y, driven by higher transport costs, while revising our FY26F CPI upward by 0.4ppts to 4.3%, reflecting an increase in transport contribution following our upwardly revised Brent crude oil assumption. Global inflation risks shift from tariff-induced to transport-led amid rising geopolitical tensions. While China’s CPI rebounded on strong Tet demand, within the US, futures has delayed rate cut bets to only one cut in 2026 and one in 2027.

Sector Insights

Real Estate Development: Weathering the storm - SBV credit guidance creates challenges

Real Estate Development: Weathering the storm - SBV credit guidance creates challenges

SBV recently issued guidance on FY26 credit quotas, setting a lower system-wide credit growth than FY25 and capping credit growth to the real estate sector at no higher than each bank’s overall credit growth. This, together with rising interest rates and surging supply, is expected to curb RE demand in the short term. Reflecting this, we cut our aggregate presales forecasts for the six developers in our coverage by 23%/19% for FY26/27, respectively, leading to earnings cuts of 7.5%/13.8% for same periods. Our new aggregate earnings forecasts suggest an FY24A-27F CAGR of 16.8% (previously: 22.7%). We see NLG and KDH – now our two top RE developer picks – as more resilient, helped by their focus on affordable-to-mid-end segments with large real demand.

Information Technology: Signs of a structural shift to a new growth era emerging

Information Technology: Signs of a structural shift to a new growth era emerging

Global sentiment has turned cautious on Tech/IT services cos. due to fears of AI disruption. This global trend has put pressure on local leaders (incl. FPT) as foreign investors react to perceived structural risks and focus on low growth prospects. While short-term growth could be challenged on ‘AI deflation’ and tighter discretionary spending, fast-adapting companies will emerge as winners. AI serves as a ‘power tool’ to modernize legacy code and manage complex integrations, allowing firms to deliver more value within existing budgets. We believe AI-IT partnerships to modernize legacy platforms will be key, as firms remain essential architects of complex enterprise systems. FPT, trading on an attractive valuation, offers a ‘the buy dip’ opportunity for long-term investors.

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