In October, FTSE Russell announced that Vietnam will be upgraded to Secondary Emerging Market status, effective in September 2026. This marked a key milestone in the country’s efforts to build a more efficient stock market, attracting foreign institutional capital and reinforcing investor confidence in the long-term outlook. Domestically, we observed accommodative monetary and fiscal policies translating into stronger consumer confidence and improving retail sales. Against this backdrop, we continued to actively manage our portfolio, adding to high-conviction holdings in consumer, technology, and affordable housing – while trimming positions that we believed had risen above our valuation targets.
In October 2025, the Kenno Vietnam Fund returned +6.0% in USD and +7.9% in EUR, bringing the year-to-date return to +11.2% in USD and –0.4% in EUR.
*Share Class A reflects the fund’s performance in USD, and Class C in EUR.
Market Overview
The VN-Index fluctuated throughout October but closed the month slightly lower at -1.3% month-over-month (MoM). October began with optimism following FTSE’s upgrade announcement, which briefly lifted large-cap names such as financials and Vingroup-related stocks. However, sentiment softened later in the month amid renewed trade tensions between the U.S. and China, and the Government Inspectorate’s report on past violations and deficiencies in certain corporate bonds issued between 2015 and mid-2023. In this environment, capital rotated toward companies with resilient earnings and improving outlooks, a trend that directly benefited our consumer-focused portfolio.
Market liquidity remained strong with an average daily trading value of USD 1.4 billion (-1.7% MoM), well above the year-to-date (YTD) average of USD 1.1 billion, placing Vietnam among the most liquid stock markets in Southeast Asia. This reflected sustained investor engagement following the FTSE Russell decision, strong Q3/2025 economic data, and expectations of solid third-quarter earnings. We expect liquidity to remain ample, supported by low deposit rates, higher capitalization among brokerage firms, and improving market outlook following the market upgrade news.
Foreign investors remained net sellers, with outflows of approximately USD 730 million, bringing YTD net selling to USD 5 billion, compared to USD 3.7 billion in 2024. Banks and brokerages continued to face foreign selling, contributing to the ongoing sector rotation. However, we observed selective net buying in large-cap names such as FPT Corporation (FPT), Gelex Group (GEX), and Vingroup (VIC). With further reforms underway as part of a clear roadmap toward additional market upgrades by FTSE Russell and MSCI by 2030, we expect foreign inflows to resume in the next five years, benefiting several of our core holdings.
In October, the Vietnamese Dong (VND) appreciated 0.4% against the U.S. Dollar following the Federal Reserve’s rate cuts, while domestic interest rates edged slightly higher. Year-to-date, the VND has depreciated 3.1% versus the USD, consistent with the State Bank of Vietnam (SBV)’s target range of ±5% a year. We expect the VND to stabilize as the government implements new measures to liberalize gold imports and localize digital asset trading, alongside a softer U.S. monetary stance.
Having more visibility into Q3/2025 macroeconomic data, we remain confident in Vietnam’s resilience amid global headwinds. Even with strong economic growth and stimulus policies, inflation was effectively controlled at 3.4% year-over-year (YoY) in September 2025. Broad-based spending confidence was supported by increased job creation, as a result of rising public investment disbursement (+43% YoY), growing export value (+16% YoY), and steady FDI disbursement (+7% YoY). With our portfolio concentrated on consumer-driven companies, it’s encouraging to see retail sales up 9.5% YoY, exceeding first-half growth. This reflects improving consumer sentiment, rising asset prices, and a pickup in employment across construction, real estate, and export sectors. At the store level, leading retailers reported stronger same-store sales, signaling a steady rebound in domestic demand heading into year-end.
Portfolio Updates
Earlier in the month, we took advantage of the rally in Vingroup-related stocks to divest half of our position at Vincom Retail (VRE), as the share price was approaching our best-case scenario. The proceeds from VRE were redeployed into FPT, Phu Nhuan Jewelry (PNJ), Nam Long Group (NLG), and Masan Group (MSN) at more attractive valuations. These holdings, especially FPT, outperformed the market by month-end thanks to strong Q3/2025 results.
This month, we highlight three investment cases that offer additional insight into our portfolio management approach:
FPT Corporation (FPT): Information Technology | 17.2% weight | +11.7% MTD
We increased our position at FPT in early October after the share price fell roughly 30% YTD, as foreign-led selling and broader market weakness drove it further below our estimated intrinsic value. At current levels, the stock trades at about 15–16x 2026 forward price-to-earnings (P/E), which we view as an attractive entry point considering our expected 17.2% annual earnings growth over 2025–2029.
FPT reported 10% YoY revenue growth and 19% YoY net profit growth in 9M/2025, in line with our expectations and ahead of market consensus. Stronger performance in telecom and retail operations (FPT Retail, or FRT) offset slower growth in the education and software outsourcing segments. Overall, the company’s diversified revenue base and operational resilience supported solid top-line and bottom-line growth.
On a positive note, we have seen early signs of recovery in global outsourcing demand, with signed backlog growth accelerated for four consecutive months to 14.4% YoY in 9M/2025, compared with 4.7% YoY in 6M/2025. This improvement is attributed to clearer visibility on global tariffs, rising AI adoption, and sustained digitalization trends. FPT’s management reported stronger client engagement and forecast continued backlog growth through year-end.
Source: FPT, Kenno
Earlier this year, we noted FPT’s strategy to move up the value chain by shifting toward high-value, integrated services, which involve overseeing clients’ entire IT systems, rather than taking on head-count-based contracts as before. We are pleased to see the company secure recent deals worth USD 200 million in Asia Pacific and USD 100 million in the U.S., confirming continued progress in this direction. These types of projects are expected to carry higher margins, drive top-line growth, and strengthen the profitability of the company’s global IT services in the long run.
Nam Long Investment (NLG): Real Estate | 3.8% weight | +7.9% MTD
NLG experienced short-term selling pressure in early October after Vietnam’s regulatory discussions on credit limits for second and third homes, as well as several measures to stabilize housing prices. Meanwhile, we viewed these developments as structural reforms to promote long-term market stability and used the opportunity to increase our holding at NLG. The company remains a fundamentally strong real estate developer, supported by a 681-hectare land bank and healthy cash flow generation.
In the first 9 months of 2025, NLG’s net profit rose 23 times from a low 2024 base, and pre-sales increased 42% YoY, both in line with our projections. Strong pre-sales momentum was a result of improving home buyer sentiment and stronger absorption of affordable housing. As licensing bottlenecks eased, NLG secured revised master plan approvals for two township projects near Ho Chi Minh City and obtained a construction permit for another project within the city.
Looking ahead, we think NLG is well-positioned to capture the next upcycle in Vietnam’s property market, especially with a clear strategy to develop integrated townships aligned with population migration trends. Favorable interest rates, improving infrastructure connectivity, and a more transparent legal framework in real estate also support the sector’s continued growth.
We forecast 65% compound annual growth rate (CAGR) in pre-sales and 42% annual net profit growth for NLG over the next two years, driven by strong execution of existing projects and a supportive business environment.
Vincom Retail (VRE): Real Estate | 6.0% portfolio weight | +3.7% MTD
VRE continued to rally early in October amid optimism surrounding Vingroup-related stocks and expectations of strong second-half earnings. We used the opportunity to trim our position further, as we believed the stock’s 94% YTD rally has already priced in most of the positives.
VRE’s Q3 results were solid, with revenue up 8.3% YoY and net profit up 52% YoY, though much of the profit growth came from non-recurring items. Core leasing revenue increased 7% YoY, and net operating income rose 6% YoY, supported by higher occupancy and an improved tenant mix across entertainment and lifestyle retail categories. We expect Q4 results to remain positive, as we continue to see steady leasing performance, the launch of three new shopping malls, and another asset sale underway.
We reduced our holdings in VRE following its strong rally but continue to retain about half of our original stake, recognizing its strategic role within the Vingroup ecosystem and leadership in Vietnam’s retail property market. The near-term prospects remain positive, driven by consistent leasing momentum, new mall openings, and stable visitor traffic.
Over the next 5 years, we expect VRE’s revenue and profit to grow at moderate compound annual rates of 7.4% and 8.3%, respectively. This reflects limited landbank availability in central areas and expansion into lower-yield adjacent regions in the longer term. Given this more measured outlook, we will continue to rebalance our portfolio should higher-growth opportunities arise elsewhere.
Closing Remarks
The market’s rebound following the FTSE Russell upgrade announcement highlights growing excitement in Vietnam’s reform progress and long-term potential. While near-term volatility may persist, we consider this as an important phase in the market’s transition toward greater efficiency and institutional participation.
Our investment strategy remains centered on high-quality, consumer-driven companies with strong fundamentals and sound governance – those best positioned to create shareholder value as Vietnam’s economy continues to develop.
