VEIL Monthly Report – June 2025

Performance

Fund Commentary

Vietnam’s provisional trade agreement with the US, announced on 3 July, marked a positive turning point for sentiment. Although further negotiations are expected, the deal reinforces Vietnam’s strategic positioning as one of only a handful of countries to reach such an understanding with the US. This reduces the tail risk of prolonged trade disruption and supports confidence in Vietnam’s macro and policy stability, critical ingredients for earnings visibility and capital flows. Our portfolio remains geared towards domestic consumption, infrastructure, real estate, and private sector development, all of which stand to benefit from an improving trade backdrop and sustained reform momentum.

This policy tailwind can be seen in the banking sector, where H1 credit growth reached +9.9% YTD. The sector led the index higher in June and remains central to our investment strategy. This conviction is reflected in our top bank holdings, including TCB, CTG, MBB and STB. Increasing 35.4% YTD, TCB saw one of the sharpest rebounds, supported by the anticipated IPO of its brokerage arm, Techcombank Securities (TCBS). Expected to be Vietnam’s largest listing since 2018, we see the IPO as value-accretive for TCB, a catalyst for further market participation, and a positive signal for both equity market development and the quality of our financial sector exposure.

Our holdings in the retail sector also contributed meaningfully in June. Masan (MSN) was the top performer, gaining 23.4% on improved earnings visibility and new tax rules, which should benefit retail operators. A proposal to raise the foreign ownership limit to 100% added further momentum. We view these developments as evidence that policy reform and regulatory clarity can act as catalysts for select holdings. These types of shifts are central to our bottom-up approach, which focuses on companies with both operational resilience and sensitivity to policy momentum.

Stock in Focus: Techcombank (TCB)

TCB is one of Vietnam’s most profitable banks and a core holding in VEIL. While best known for its leadership in digital banking and real estate lending, a key strategic asset is its wholly owned brokerage arm, Techcombank Securities (TCBS), which is preparing to IPO. Founded in 2008, TCBS took a different path from traditional brokers by focusing on the bond market and leveraging TCB’s deep corporate relationships. It has since been the sector’s most profitable broker for seven consecutive years. As of 2024, TCBS ranks first in corporate bond advisory and margin lending, and third in equity brokerage market share.

TCBS has built a scalable, tech-driven wealth platform offering cash, bonds, stocks, derivatives, and fund certificates. Its seamless integration with TCB’s affluent client base provides a strong competitive advantage. Operational efficiency is sector-leading, with a cost-to-income ratio of 14% and ROE of 15%. As the capital markets deepen and Vietnam accelerates its shift toward a more mature economy, TCBS is well placed to be a primary beneficiary. For TCB, this move reinforces its position as the most strategically diversified financial institution in the market. We maintain high conviction in TCB’s long-term growth story, and forecast 2026 revenue and EPS growth of 25% and 23%, respectively.