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The best investment trusts for Vietnam's rise

Like several of its neighbours, the country has its eye on exporting high-value technologies
The best investment trusts for Vietnam's risePublished on September 11, 2024

If the geopolitical chaos of the past five years has taught multinationals anything, it’s that the only stable supply chain is a diversified one. Although China remains the world’s manufacturing superpower, its status among major western companies took a serious knock during the pandemic. Its government’s zero-Covid policy meant factories and logistics operations were at a standstill long after other major economies had loosened their own restrictions. 

Companies such as Apple (US:AAPL) and Volkswagen (DE:VOW3) were still complaining of product shortages at the start of last year. Bloomberg suggests that the US tech giant doubled its production of iPhones in India as a result. Similar moves have become so common that they’ve earned their own name: 'China plus one.' Companies pursuing these strategies don’t quit the country altogether – instead they build out their manufacturing capabilities in neighbouring nations. 

Vietnam has been a major beneficiary of this shift: foreign direct investment was up 32 per cent last year to nearly $37bn (£28bn). Meanwhile, the country’s export revenues rose 14.5 per cent year on year in the first half to $190bn and industrial production increased by almost 11 per cent. Given these factors, it’s not surprising that Vietnam’s GDP growth is projected to be around 6 per cent this year – a prospect that probably sounds enticing to investors from more static, developed economies.

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