August was an eventful month for Vietnam’s economy and equity market. Domestic liquidity and policy support kept the market moving higher, even as foreign investors remained net sellers. Within this setting, we made selective adjustments but stayed disciplined in how we position the portfolio, keeping our focus on long-term fundamentals and the broader consumer growth story.
Market Overview
The VN-Index rose +12% in August, extending its three-month rally to +26% in local currency. Gains were broader-based, not only focused on big conglomerates as before, but also extended to banks, brokers, insurance, energy, and real estate, all rising +15–22%. Strong market performance has been accommodated by favorable macro conditions, including low lending interest rates, accelerated credit growth (+19% YoY, or +11.3% YTD versus +6.2% YTD in 8M/2024), positive Q2 corporate earnings (+32% YoY), and a recovering property sector. Investor confidence has also been lifted by the anticipation of Vietnam's potential FTSE reclassification in early October 2025, boosting market liquidity (+39% MoM) and directly benefiting brokerage firms.
Foreign investors reversed to net outflows of USD 1.7 billion during the month, following net inflows in July, bringing YTD net selling above USD 3 billion. Outflows were driven by concerns over VND depreciation and the interest rate differential between Vietnam and the U.S. (Vietnam’s government bond yields remain well below those of the U.S). However, looking ahead, we expect to see net inflows of foreign capital following the potential market upgrade, which would benefit our top holdings such as MWG, MSN, FPT, and VRE.
On the macroeconomic front, we observed developments that continue to support economic growth and reinforce the positive outlook for our consumer-focused investment portfolio. Firstly, the State Bank of Vietnam (SBV) introduced further supportive monetary policies, including a 50% cut in the required reserve ratios for specific credit institutions tasked with restructuring weak banks. This creates ample room for these banks to extend their credit provision in the coming periods and underpins continuing economic growth. Secondly, infrastructure upgrades remain a highlight with public investment disbursement rising by +47% YoY in the first eight months. The government reaffirmed its willingness to achieve 100% of the full-year disbursement targets, aided by new regulations to streamline state budgeting and enhanced administrative procedures. These developments, along with early signs of recovery in purchasing power reported by large retailers, indicate a strengthening consumer market, which will directly benefit our portfolio.
Portfolio Updates
Our latest portfolio activity included divestments from LHG and VRE, as we see limited long-term upside at current valuations and continue to reduce exposure where the outlook is less favorable. Meanwhile, we added to PNJ, FRT, and FPT, bringing these positions closer to target weights where valuations remain attractive for long-term investors.
The Kenno Vietnam Fund gained +5.9% MoM in USD and +3.6% in EUR in August 2025. This month, we'd like to highlight the following holdings to give you insight into our investment management activities.
FPT (IT services | 13.1% portfolio weight):
The stock lost 2.3% MTD due to market concerns over a short-term slowdown in earnings growth and signed backlog in the software outsourcing segment. This reflects weaker demand in the U.S. and APAC markets amidst global macro uncertainties, while growth in the Japan and EU markets remains solid.
We believe the YTD decline made FPT’s valuation more attractive in the long run, with an expected 5-year earnings growth of +21%. As the return outlook has improved, we bought more shares in August, after selling a part of the position last year to realize a profit.
On the business side, we learned that FPT is transitioning to adopting AI into its service capability. The company recently signed a USD 100 million, 3-year contract with a North American client to provide digital transformation services. This followed a record USD 225 million Managed Services contract last year, demonstrating FPT’s progress in moving up the global value chain.
PNJ (Jewelry | 6.0% portfolio weight):
The stock gained +1.4% MTD of its market value. We increased the position as we forecast that PNJ can achieve an earnings CAGR of +15.3% over the 2025–2029 period despite short-term challenges this year. We target a potential upside of +80% for PNJ from the current market price.
PNJ’s earnings in H1/2025 declined 4% YoY, mainly due to gold input shortages and higher gold prices that softened jewelry demand. However, results were still ahead of our expectations, with jewelry retail growth remaining solid (+4.4% YoY) and gross margins rebounding strongly thanks to effective gold inventory management.
In August, the government ended the SBV’s monopoly on gold bar import and manufacturing, allowing commercial banks and private manufacturers to enter the market. PNJ is one of the few jewelers that stand to benefit directly from this change — resolving material shortages, supporting margin improvement over time, and reaffirming the long-term earnings growth outlook.
MWG (Modern retail | 18.7% portfolio weight):
The stock gained +19.4% MTD on stronger-than-expected earnings growth in H1/2025. In addition, MWG’s management recently set 2030 targets for TGDD and DMX to double earnings, while BHX aims to reach USD 10 billion in revenue (versus USD 1.6 billion in 2024). These goals are ambitious but grounded in new market drivers and the company’s proven internal strengths.
Regarding MWG’s markets, the phones and consumer electronics sector (for TGDD and DMX) is expected to regain high single-digit growth over the next five years — supported by shorter replacement cycles driven by new technology, more favorable policies such as tax and e-invoice regulations that benefit established branded players, and robust economic growth that will gradually translate into stronger consumption demand. At the same time, the grocery and FMCG market (for BHX) is poised for deeper penetration by modern retail chains that emphasize product quality, food hygiene, and shopping experience.
On the corporate side, MWG’s advantages lie in strong execution, a well-established platform, and the ability to provide complete lifecycle services that unlock new income streams. We believe the company’s growth will be propelled by its chains from both business arms. We are forecasting MWG’s 2025 full-year earnings growth of +37% and 5-year earnings growth CAGR of +17%, both subject to upside risk following recent developments.
Closing Remarks
August brought macro trends that supported some of our portfolio businesses, particularly in retail. We maintain firm conviction in our companies’ fundamentals and their ability to capture the growth of Vietnam’s consumer market. We believe that ongoing pro-private-business reforms and rising consumer confidence provide a solid background for the country’s domestic consumption sectors to thrive, similar to what we now see in the rally across finance, insurance, and real estate. While foreign outflows continued, we consider the upcoming FTSE review a potential turning point for foreign participation — fairer regulations, improved market efficiency, and new investor entry points. Our outlook is positive, but we remain attentive to near-term market movements as we position the portfolio for long-term growth.
