Ongoing tensions between the US and Iran in the Middle East, including the US’ blockade targeting Iranian ports and Iran-linked maritime traffic through the Strait of Hormuz, have placed additional pressure on global trade and energy markets. While global crude oil prices have eased over the past week, a key concern remains the ongoing disruption to supply flows through one of the world’s most critical shipping routes.
For Vietnam, this introduces near-term uncertainty given its exposure to imported oil. However, both policymakers and enterprises across sectors have been taking proactive steps to limit external impact and support economic stability. Below, we review key developments that have helped Vietnam, and our investment portfolio, remain resilient.
In the past week, Vietnam has moved quickly to strengthen supply buffers. The Ministry of Industry and Trade (MoIT) confirmed that petroleum reserve coverage has increased from 15 days to 26 days at the distribution level. Analysts at Vietcap estimate total system reserves at approximately 60 days, including refinery inventories, supporting stable petroleum supply from now through May. Meanwhile, supply arrangements for June are underway.
At the sector level, the Civil Aviation Authority of Vietnam (CAAV) has secured jet fuel supply through April to ensure stable operations during the upcoming public holiday period around 30 April – 1 May. This reduces the risk of short-term disruptions in transport and tourism, maintaining necessary momentum for domestic consumption.
On top of immediate responses to short-term supply pressures, the government has also introduced measures to improve energy efficiency in the long run – some of these were covered in our previous update. Most recently, the nationwide adoption of E10 gasoline has been proposed to increase Vietnam’s gasoline self-sufficiency and reduce emissions. At the same time, temporary tax exemptions on gasoline, diesel, and jet fuel have been extended to 30 June 2026 (previously 15 April 2026) to stabilize prices.
Potential supply disruptions and higher energy costs are likely to moderate growth in the near term. Under a prolonged disruption scenario, economists forecast Vietnam’s economic growth to slow down by around 1 percentage point over the next two years. The latest report by the Asian Development Bank (ADB), Asian Development Outlook April 2026, estimates GDP growth of 7.2% for Vietnam in 2026 and 7.0% in 2027, making it the fastest-growing major economy in Southeast Asia.
By comparison, Indonesia, Malaysia, and the Philippines are expected to grow at around 5%, while Thailand remains closer to 2%, reflecting weaker domestic demand. If energy-related disruptions persist, higher import costs and inflation could weigh more on these economies. In contrast, Vietnam’s stronger consumption recovery and ongoing public investment provide a more stable growth base, supporting continued outperformance in the region.
In our view, the broader macro backdrop remains supportive. Domestic consumption continues to recover, with retail sales up 10.9% year-over-year in Q1/2026, supported by stable employment, improving income levels, and accelerating infrastructure investment. First-quarter GDP growth reached 7.8%, indicating that underlying momentum remains intact.
The State Bank of Vietnam (SBV) is also actively managing liquidity and stabilizing the Vietnamese dong (VND) through higher deposit rates and targeted FX measures. These include providing banks with additional USD liquidity to ease short-term demand pressure, as well as cracking down on illegal gold and crypto trading activities to reduce speculation and USD demand in unofficial markets. These measures have helped keep VND depreciation moderate at 1.1% month-over-month, despite stronger US dollar conditions globally, with the US dollar index (DXY) up 2.4% in March.
Overall, we assess a limited impact from the current Middle Eastern conflict on our portfolio. While uncertainty around supply chains can affect logistics costs, input prices, and consumer sentiment, most of our holdings operate in essential sectors or have sufficient pricing flexibility to manage these pressures. As a result, the transmission from energy shocks to earnings remains moderate. While higher interest rates could affect a small number of leveraged companies, most of our holdings are not exposed to this risk given their strong net cash positions.
We take Mobile World Corporation (MWG) and Masan Group (MSN) as two examples reflecting our stable portfolio positioning. In discretionary retail, while demand for electronics at MWG may soften if inflation rises, its grocery segment (BHX) provides a stable revenue base and allows for gradual pricing adjustments, while its scale helps manage supplier and logistics costs effectively. On the other hand, MSN, with its focus on essential consumer products, benefits from steady demand and maintains sufficient pricing flexibility to offset cost increases, making it less affected by rising oil prices. Overall, we expect demand in non-discretionary segments, where a large portion of our portfolio is allocated, including grocery retail, food and beverage, healthcare, and pharmaceuticals, to remain resilient.
Looking at the broader market, company-level performance remains in line with expectations despite global uncertainty. We are currently in the 2026 AGM season, with discussions so far pointing to steady earnings projections, reflecting unchanged business fundamentals. While global headlines may continue to drive stock market volatility and foreign capital outflows, we maintain a positive outlook on Vietnam’s economic growth, especially with domestic consumption being a core structural strength.
The Kenno Vietnam Fund invests in high-quality companies focused on Vietnam’s domestic consumption and resilient economic growth. We actively engage with our holdings to support consistent earnings growth and deliver attractive returns to our investors. If you are looking for exposure to one of Asia’s fastest-growing economies, feel free to reach out to us.