March was marked by sharp market volatility as the War in Iran pushed global energy prices higher and disrupted investor sentiment across emerging markets. The VN Index declined by around 11.9% in USD during the month, while the Kenno Vietnam fund’s net asset value decreased by 10.9% in USD and 8.7% in EUR.
Despite a sharp decline in FPT (-19.5%), the portfolio still outperformed the market in March. This was driven by the resilience of our Consumer Staples and Healthcare holdings, where several companies reaffirmed strong 2026 guidance despite the uncertain economic environment. Besides, NLG (+4%) posted a positive return in March, confirming our earlier decision to increase our holdings based on the company's attractive valuation and resilient outlook.
Although the investment environment remains challenging, we believe the portfolio is well-positioned to navigate current geopolitical uncertainty and come out stronger.
Market Overview
VN Index fell 10.9% in local currency in March as investors reacted to the escalation of conflict in the Middle East. The pullback was broad-based, but toward the end of the month, we saw a decent recovery following the Government’s proactive and effective measures to ensure energy supplies and prices in the local market, as well as companies starting to release strong 2026 guidance despite the uncertainty (more details below).
Daily trading liquidity increased by 6.4% month-over-month (MoM) to USD 1.3 billion, indicating that investors actively returned to the market after the long Tet Holiday break, while foreign investors continued to net sell USD 665 million in March 2026, bring year-to-date (YTD) net sell value to USD 1.2 billion, compared with the 2025 net sell value of USD 5.1 billion.
Because the conflict involving Iran dominated headlines last month, our commentary focuses on how this situation affects Vietnam – and why we believe the country as a whole, and especially, our portfolio, is still well positioned to navigate this period of uncertainty. For those of you who would like to go deeper, we’ve shared a more detailed look at how higher oil prices affect our portfolio companies on the client portal.
The impacts are real, but manageable
To start with, Asia is the world’s largest net importer of crude oil, with nearly 60% coming from the Middle East. Vietnam, despite producing some crude oil, still imports about two‑thirds of its crude oil needs and one‑third of its refined fuel. So disruptions in the Strait of Hormuz inevitably spill over to us as well.
The most immediate effect we see on the ground is higher retail fuel prices, which feed into logistics and transportation costs. Our estimate suggests that a 10% increase in gasoline prices typically adds around 0.3 – 0.4 percentage points to inflation. As a result, we are already seeing some food producers respond by modestly raising prices. So far, however, end-consumer demand has remained relatively stable, suggesting that higher prices have not led to meaningful impacts on sales volume.
The currency is another area under pressure. With Vietnam being a net energy importer, higher oil prices mean higher USD demand. At the same time, the U.S. Dollar Index (DXY) rose approximately 3% in March, reflecting a shift in market expectations toward a prolonged period of elevated Fed policy rates, as opposed to earlier expectations of rate cuts. Together, these factors contributed to around 1.1% depreciation of the VND during the period. This movement was also reflected in the unofficial market, where currency transactions take place outside the official banking system, and the exchange rate can trade at a premium to official rates during periods of high USD demand.
But from a broader perspective, Vietnam benefits from two key buffers that soften the overall impact. First, food makes up roughly 30% of the CPI basket, and thanks to favorable soil and climate conditions, Vietnam is largely self‑sufficient in staples such as rice, vegetables, meat, and eggs. This helps stabilize food prices as well as the overall inflation in the long run. Second, Vietnam’s electricity system relies heavily on hydropower and renewables (45% of total electricity production in the first ten months of 2025), while gas‑fired power makes up less than 10%. This limits the risk of a sharp jump in electricity prices, a problem many other countries face when their energy supply becomes insufficient.
Overall, economic activities continue without major disruption. In the first two months, inflation remains well contained at below 3%, comfortably under the 4.5% annual target. This provides policymakers with room to respond to external shocks without compromising macro stability. In this context, a moderate increase in consumer prices is likely to be tolerated, helping ensure that fuel imports and distribution remain economically viable and supply disruptions are avoided. This is critical to sustaining economic growth. The policy response so far reflects this priority, with short-term measures and longer-term strategies as mentioned below aligned toward safeguarding energy security while supporting the government’s growth objectives.
Government actions to address the disruption
Since the conflict began, the Government has taken quick steps to ease the pressure on fuel imports and ensure a continuous domestic supply of petroleum products. Oil producers have also been directed to prioritize domestic refineries when their crude meets technical requirements. At Nghi Son Refinery, the biggest refinery in Vietnam, greater flexibility in crude blending has already helped cut dependence on imports from Kuwait.
More importantly, various measures have been put in place to limit the pass-through of higher global oil prices into domestic oil prices and stabilize retail fuel prices, helping protect household purchasing power. The Government has decided to draw on the Price Stabilization Fund, which is funded by gasoline and diesel buyers. The Fund previously held more than USD 230 million and was largely utilized within one month for intervention; therefore, it recently received a rare advance worth over USD 300 million from the State budget to ensure continuity, which we estimate will allow the support to continue until the end of May. In addition, for critical energy sources like petrol, diesel, and jet fuel, supports include cutting import tariffs from 3-10% to 0%, and removing environmental, excise, and value-added taxes. These measures help temporarily reduce the tax and fee burden on each liter of fuel from roughly 32–33% to nearly zero, effectively stabilizing the retail fuel prices.
In parallel, the Government has refined the domestic fuel pricing mechanism following lessons from the supply–demand imbalances seen in 2022. Previously, prices were adjusted only every seven days, so domestic prices lagged global spikes, and some distributors cut supply to avoid losses. Now, prices can be adjusted immediately if the base price rises by 15% or more, allowing quicker alignment with global markets and ensuring stable supply. Fuel prices are still regulated, but the framework is now more flexible and responsive to changes in global oil prices.
Looking ahead, a clear lesson from this episode is the importance of making Vietnam’s energy system more resilient. The country is considering expanding its national petroleum reserve from roughly 30 days to 90 days - similar to some developed countries like the US and Japan. At the same time, Vietnam is looking to gradually diversify fuel import sources toward partners in ASEAN and India to reduce concentration risk. Today, more than 80% of Vietnam’s crude oil imports come from the Middle East, largely because of favorable logistics and the fact that major refineries such as Nghi Son and Dung Quat were designed to process crude from that region, particularly Kuwait. Therefore, broadening the supplier base is a logical next step toward strengthening long‑term energy security.
One positive outcome of this crisis is the sense of urgency it has created, which is helping accelerate structural shifts that were already underway. The Government recently issued Directive 09, setting a target for at least 50% of public transport to be electric by 2030 and advancing the nationwide rollout of E10 biofuel to April 2026, rather than June 2026 as before. E10 biofuel is gasoline blended with 10% ethanol, which is locally self-supplied; therefore, adopting this fuel is expected to help reduce total gasoline demand by 10% within this year. Also in practice, the EV and e-scooter manufacturer VinFast has set 2026 sales targets of at least 300,000 EV units (+52% year-over-year, or YoY) and roughly one million 2-wheel units (2.5x YoY), accounting for 50% and 38% market share, respectively. All together, these measures aim not only to strengthen energy security in the short term but also to support the shift toward a more sustainable, less fossil‑dependent economic model in the long term.
Portfolio Updates
We’re now entering AGM season, and companies have begun releasing their 2026 guidance. Overall, the numbers are broadly in line with what we expected, even with the recent geopolitical concerns. Across the portfolio, earnings growth remains solid and well supported by underlying business trends.
Mobile World Corporation (MWG) is sticking with its ambitious target of 30% net profit growth, driven by continued strength in phones and consumer electronics, alongside the rapid expansion of its grocery and FMCG business. FPT Retail (FRT) is also guiding for 27% profit growth, underpinned by the ongoing store rollout and strong performance of its modern pharmacy chain.
In commercial real estate, Vincom Retail (VRE) has successfully been restructuring its tenant mix over the past year towards high-demand segments, such as supermarkets, food, beverage, and entertainment. With ongoing momentum expected, the company targets around 15% like‑for‑like growth in both revenue and profit, supported by higher occupancy across its existing malls and the addition of one new shopping mall during the year.
In the meantime, FPT Corporation (FPT) is guiding for 15% growth in profit before tax, supported by a robust 25% increase in profits from its IT services segment. In our view, this guidance looks sensible – and possibly even conservative – given the strong contract backlog the company has already secured over the past two quarters.
As portfolio companies are in the process of preparing AGM proposals, we have been actively engaging with them as long-term, active shareholders. At Traphaco (TRA), we worked closely with the board of directors and the management, focusing on areas where we believe improvements can unlock long‑term value, including corporate governance, disclosure, and capital allocation. Most notably, we proposed that TRA modernize its governance structure by abolishing the Supervisory Board and consolidating oversight within the Board of Directors through the existing Audit Committee. We believe that this consolidation will help reduce overlap, improve oversight effectiveness, and simplify its governance model, in line with the best practices recommended by the G20/OECD Principles of Corporate Governance. In addition, as we believe that TRA’s current capital structure is not optimal, we recommended that the BoD present a clear capital allocation plan, including the rationale for its current net cash position and a disciplined framework for returning excess capital to shareholders.
On the other hand, at Nam Long Group (NLG), we are working together with another major shareholder to support the appointment of a non‑executive director for the upcoming Board term. NLG is in the middle of an important shift, moving from a traditional residential developer focused on smaller, individual projects to an integrated township developer responsible for large‑scale developments of more than 100 hectares. This kind of business requires a broader set of skills, not just in building homes, but in planning and operating full communities with infrastructure, services, and amenities. As a result, we believe adding a Board member with deep experience in township development is both timely and necessary. This should help the company execute its transition more effectively, speed up the monetization of its large landbank, and ultimately improve returns for shareholders.
In March, we used what we half‑jokingly call the “SaaS apocalypse” to increase our position in FPT. The share price continued to decline, largely due to persistent foreign selling and negative sentiment toward the broader technology sector, rather than any change in the company’s fundamentals. In our view, this created a clear gap between price and reality that became difficult to ignore. At around 11 times forward earnings – a level we haven’t seen in the past seven years – FPT is trading well below its historical valuation, despite strong earnings visibility and a solid multi‑year growth outlook.
Besides, we also used the market weakness to increase our position in FRT to our target weight of 10%. FRT’s three‑year outlook remains compelling as well, with an expected earnings CAGR of 36%.
Below, we highlight investment cases that illustrate our portfolio management activities during the month, with more of our insight into FPT flow-driven movements in recent times.
FPT Corporation (FPT): Information Technology | 16.3% weight | -19.6% MTD | -22% YTD
FPT’s share price declined by 19.6% in March, driven by continued foreign selling pressure. Year‑to‑date, foreign investors have recorded net outflows of USD 355 million, lifting FPT’s available room for foreign ownership to 15.9%, the highest in 15 years. This mirrors a broader global trend where investors are reducing exposure to traditional IT services companies amid worries that AI could replace parts of the workforce and soften long‑term demand.
We believe that these concerns are largely overstated and the recent share price weakness is more about market flows than a reflection of structural changes in FPT’s fundamentals. While AI can automate some routine tasks such as basic coding or testing, the more complex and higher‑value work still requires human judgment and industry expertise. FPT has also been shifting away from the traditional outsourcing model toward providing full digital transformation services. The company now combines cloud, data, and AI solutions as part of its client offerings. This shift is reflected in the quality of its contracts, with the number of mega deals worth over USD 10 million more than doubled to 26 in 2025. FPT also secured a record USD 256 million contract last year with a major energy group in Asia, becoming its key technology partner for the next five years.
In 2026, FPT’s financial guidance includes 18.4% revenue growth and 25% pre‑tax profit growth in the core technology segment. We see these targets as achievable. The order backlog grew 21% by the end of 2025 and continued to grow 24% YoY in the first two months of 2026, providing solid earnings visibility. At the same time, FPT is embedding AI across its operations and client solutions, allowing it to capture higher‑value opportunities. Domestic demand is also supportive, with Vietnam’s national digital transformation program aiming to move all public services online by 2030, underpinned by the development of a national data infrastructure. This should help drive continued growth in IT spending.
The recent accounting change related to FPT Telecom (FOX) has also raised questions. Previously, FOX was consolidated even though FPT owned only 45.7% stake in FOX. Under the new accounting treatment (equity method), FOX’s revenue and assets are no longer consolidated, but its profit contribution remains unchanged. This is an accounting adjustment only and does not affect the business itself.
Overall, we remain positive on FPT. We expect earnings to grow 18% in 2026, with a three‑year compound annual growth rate (CAGR) of 17%, supported by solid execution and a healthy demand environment across key markets, including Japan, APAC, and Europe.
FPT Retail (FRT): Healthcare & Discretionary | 10.9% weight | -7.1% MTD | +5% YTD
FRT’s share price has pulled back 7.1% during the broader market correction in March, even though the company’s underlying fundamentals remain strong and the outlook is still positive. In its 2026 AGM materials, the company guides for 16% revenue growth and 27% growth in profit before tax. We view these targets as conservative and believe the company is well-positioned to exceed them, similar to what happened last year.
For 2026, we forecast earnings growth of 43% and expect a CAGR of 36% over the next three years. This outlook is supported by Long Chau’s continued store expansion – its network is projected to grow by about 10% per year in the next three years – and improving profitability, with net margin expected to rise from 2.6% in 2025 to 4.4% by 2028. Given that FRT is expected to move to a net cash position for the first time in 2026, we also expect a lift from higher financial income starting this year.
In terms of business priorities for 2026, Long Chau aims to maintain its strong growth momentum by opening new stores selectively in Tier 2 and Tier 3 cities and by improving the quality of its key prescription drug offerings, such as new-generation, rare, and specialized drugs. Prescription drugs now account for over 70% of its sales and remain one of its main competitive strengths compared to other modern pharmacies. Another important goal for 2026 is to grow the vaccination business and turn it profitable. Adult vaccination rates in Vietnam are still very low – only around 5% for flu and 3% for HPV – compared with 50–70% in developed markets. Given Long Chau’s large customer base and strong supplier relationships, we see meaningful potential for vaccines to become its next major growth driver over the long term.
Besides Long Chau, the ICT retail chain FPT Shop also plans to add more non-traditional products and services into its network, ranging from consumer electronics, home appliances, to mobile virtual network operator (MVNO) service. Given its enhanced efficiency and the addition of new revenue streams, we expect FPT Shop to contribute more positively to the consolidated financial results of FRT.
Closing Remarks
Volatility like this is never comfortable, but it does tend to create opportunities. If we see further pullbacks, we would look to selectively add to high-quality positions at even more attractive valuations.
For those of you who subscribed at the end of February, just before the war began, we would not read too much into the short-term market moves. This kind of volatility is something we’ve seen before. We saw a similar pattern during the tariff-related uncertainty, where the Vietnamese market recovered within a quarter as fundamentals came back into focus and capital flows stabilized. We would expect something similar this time as well, as short‑term fears fade and underlying performance starts to matter again.
