At a glance
- VEIL’s NAV fell 9.8% in April, following a sharp market correction triggered by the US tariff announcement.
- Domestic-focused retail names proved resilient amid volatility, supported by strong Q1 earnings and upbeat AGM guidance.
- Banks were the largest drag on performance, driven by foreign selling amid concerns that tariffs could lead to slower credit growth and economic slowdown.
Performance
Fund Commentary
April was a month of extreme volatility, with an early sell-off triggered by investor anxiety over the US tariff announcement. While the correction was large and broad-based, the market has shown signs of resilience in May, and we are encouraged by the recent US-China 90-day tariff pause.
Banks were the main drag in April, with our top three sector holdings, ACB (-8.8%), TCB (-6.1%) and VCB (-13.0%), contributing to a 3.8% sector-level pullback. Foreign outflows intensified on concerns that tariffs could dampen credit growth and delay economic momentum. While this caution is understandable, we believe the market reaction was excessive. Q1 results from our bank holdings were encouraging, with stable margins, sound asset quality, and steady loan growth. We continue to view the sector as integral to Vietnam’s long-term development, particularly as fiscal support, property, and infrastructure spending gain traction. Industrial parks also came under pressure on tariff-driven FDI concerns, but we had already trimmed exposure in Q1 on strength, limiting the impact. While uncertainty remains, we believe their fundamentals remain sound. Leverage is moderate (40–60% debt-to-equity), and each holds sizeable clean residential land banks, providing a buffer in case of any delayed IP sales.
By contrast, retail holdings MWG and FRT proved resilient. Our largest holding, MWG, ended flat against a falling market on upbeat AGM guidance and strong Q1 data (+15% revenue, +71% profit). FRT held steady, supported by the announced private placement of its pharmacy chain, Long Châu, with Creador acquiring 13%. While short-term performance was challenged, we believe the portfolio is aligned well with Vietnam’s growth trajectory. We continue to monitor developments and are actively assessing where sentiment dislocation may present selective opportunities.
Stock in Focus: Mobile World Group (MWG)
Established in 2004 and publicly listed a decade ago, Mobile World Group (MWG) began as Vietnam’s leading mobile phone retailer. Over the past ten years, it has expanded to become the country’s largest overall retailer, dominating not just mobile phones but also consumer electronics and groceries. With over 5,400 stores nationwide and annual revenue exceeding $5bn, MWG remains a core name in Vietnam’s retail sector.
2024 was a turning point for grocery arm Bach Hoa Xanh (BHX) as it delivered its first profit following a multi-year restructuring. The focus has now shifted to expansion, with over 230 new stores opened in Q1, well on track to meet the 400-store 2025 target. The company has guided for $20mn in net earnings for BHX in 2025, a remarkable turnaround from a loss of over $40mn just two years ago. Given the incredibly fragmented nature of the retail market in Vietnam, where modern trade only accounts for roughly 25%, BHX has significant room for growth as the sector matures.
Beyond groceries, MWG is actively exploring new growth drivers. It owns a 45% stake in a joint venture in Indonesia’s consumer electronics space, which has reached 100 stores and recently turned profitable. MWG is also developing new retail chains in the pharmaceutical and “mom & baby” segments. Having been a core VEIL holding since its IPO ten years ago, MWG continues to represent our highest-conviction position for capturing Vietnam’s growing middle class and rising domestic consumption.
