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Vietnam Holding Investment Fund has released a short-term market update, noting that March’s positive developments were largely overshadowed by geopolitical volatility, particularly the conflict in Iran and the prolonged disruption in the Hormuz Strait. While these events drove sharp market swings, the fund highlights a key milestone for Vietnam’s stock market: FTSE Russell’s confirmation that Vietnam will be upgraded to a secondary emerging market, effective from September 21.
The fund said tensions in the Middle East continued to weigh on investor sentiment throughout the month. It added that disruptions to global energy supply chains have fed through to inflation, trade, and growth expectations. As a net importer of crude oil, Vietnam is exposed to these effects, and inflation for the month rose modestly, reflecting higher energy costs and external pressures.
Despite this, the fund described Vietnam’s economy as relatively resilient. It pointed to a consumption structure that is less energy-dependent than in many countries, supported by buffers including domestic production capacity in hydroelectric and oil and gas, an increasing contribution from renewable energy, and a degree of self-reliance for essential agricultural inputs.
FTSE Russell’s upgrade of Vietnam to a secondary emerging market—effective September 21—was described as a significant long-term development. The fund said the decision reflects improvements in market infrastructure, the legal framework, and investor accessibility.
According to the update, the upgrade is expected to support the attraction of more capital flows over the long term, including both passive and active investment. While the fund acknowledged that the market’s short-term reaction was influenced by global geopolitical developments, it emphasized the upgrade’s broader importance for the next phase of market growth.
The fund cited QI trade data showing the usual pattern: imports rose sharply, especially machinery and intermediate goods, resulting in a small deficit. It characterized this as a positive signal because import trends tied to production often precede improvements in exports in subsequent quarters, helping set up the outlook for Q2.
Against this backdrop, the stock market had a less favorable month, the fund said. Investor sentiment tightened as global risks increased and policy expectations—particularly in the United States—shifted, adding pressure to the market.
The fund reported that the NAV of VNH fell by 10.0% in March. However, it noted that year-to-date returns have still outpaced the index, supported by a prudent asset allocation strategy and a focus on companies with solid earnings foundations.
In periods of volatility, the fund said maintaining valuation discipline and prioritizing asset quality remain central to risk control and preserving growth headroom.
The fund maintained that Vietnam’s long-term growth potential remains intact. It described the FTSE upgrade as more than symbolic, saying it recognizes ongoing reform efforts and can act as a catalyst for the market’s next growth phase.
It also pointed to continued positive foreign direct investment and ongoing momentum driven by foreign capital flows, expanding domestic demand, and proactive measures to mitigate external risks.
In closing, the fund said March is a test for resilience rather than growth itself, emphasizing that for long-term investors the key factor is the ability to maintain the growth trajectory in a more unpredictable global environment.
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