Why does Matco believe that Vietnam is Asia’s next rising dragon?

Vietnam today has many similar features to China 20 years ago. Namely, the young educated population, strong work ethic, growing middle class, lower labour costs, substantial foreign direct investment, and a pro-growth government.

Vietnam has quietly become one of Southeast Asia’s success stories. It started with economic reforms policies in 1986. The reforms saved Vietnam from the failures of a centrally planned economy and self-isolation. Today Vietnam benefits from global factors, such as the rise of trade and political tensions between the U.S. and China. It has also benefited from a free trade agreement with the European Union and is part of the Trans-Pacific Partnership Agreement.

These positive factors led to Vietnam being one of the few countries to post positive Gross Domestic Product (GDP) growth in 2020 during the global pandemic. Vietnam’s 2022 GDP growth is estimated to increase to 6.5% from the expected 3.8% growth in 2021.

Vietnam’s aspirations to become a high-income country by 2045 will require it to continue to grow its economy at 5% annually.

Vietnam is a bustling country with a population of 98 million and an estimated 2021 GDP of US$396 billion. We see Vietnam as a long-term secular investment based on many growth drivers: 61% of the population is between ages 15 and 55, growing middle class, proximity to China with 60% lower labour costs, high literacy rates, government’s 40% increase in infrastructure spending, and the potentially new fiscal package worth 10% of GDP for 2022.

Vietnam Stock Market Growth

Despite a faster economic growth rate, the Vietnam stock market remains smaller than its GDP. Other Asian countries have stock market values greater than GDP. For example, Malaysia at 130%, South Korea at 134% and Thailand at 104%. Therefore, an opportunity exists for the patient, long-term investors as the country’s stock market plays catchup.

Source: World Bank


Vietnam is an export-based country with top exports in telephones, mobile phones, textiles, garments, computers, and electronics. Its key export markets are the U.S., European Union and China. Foreign direct investment into the country continues to grow. Many multi-national brand name companies have moved production from China or set up separate manufacturing operations in Vietnam. Recently Lego announced a US$1 billion manufacturing facility to be built and operational in 2024. Multi-national companies with existing operations, such as Samsung and Nestle, have reported significant investments.

The Bottom Line
Based on our view of Vietnam as a long-term secular growth investment, we have exposure to Vietnam in our Matco Global Equity Fund.

Anil Tahiliani

Anil Tahiliani, MBA, CFA
Senior Portfolio Manager, Canadian Equities
Local: +1-403-539-5085

Baron Lee, CFA
Senior Portfolio Manager, Global Equities

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