ETFs that stand to gain from Vietnam's expanding tech sector

The Asia-Pacific region encompasses numerous economies widely recognised as technology powerhouses, notably China, India, Japan, South Korea, and Taiwan.

Moreover, while smaller in economic scale compared to these nations, Vietnam is steadily asserting its presence in the region's tech landscape. The nation's technological advancement has the potential to benefit investors and they can do so through ETFs focused exclusively on Vietnam.

Currently, there are no ETFs with direct exposure to the technology sector in Vietnam. This is primarily due to the majority of Vietnamese technology or consumer internet companies not being publicly traded yet. It is conceivable that over time, the underlying index of the ETF may adapt to more accurately mirror the expanding tech sector of the country.

Here are selected ETFs focused on Vietnam, available on the CMC Invest platform:

• VNM:US – VanEck Vietnam ETF
• VNAM:US – Global X MSCI Vietnam ETF
• 3004:HK – CSOP FTSE Vietnam 30 ETF

The largest Vietnam ETF, VanEck Vietnam ETF (VNM:US) currently lacks direct investments in technology stocks, but it stands to gain from Vietnam's burgeoning tech environment. Notably, the ETF assigns 28% of its portfolio to financial services stocks, representing its largest sector exposure. Many of these companies could play integral roles in financing and supporting Vietnamese tech enterprises.

Data confirms the promising trajectory of Vietnam's digital economy, which is projected to reach $49 billion by 2025 with an annual growth rate of 31%. Moreover, approximately 73% of the population has internet access, a significant increase from just 2% in 2002, positioning Vietnam as the 12th largest internet user globally, as noted by Dragon Capital.

Data confirms the promising trajectory of Vietnam's digital economy, which is projected to reach $49 billion by 2025 with an annual growth rate of 31%.

Such statistics bolster heightened foreign direct investment in Vietnam, with potential ripple effects across various industries, including those represented in VNM. Western tech giants are actively exploring opportunities in Vietnam, particularly in the crucial semiconductor sector.

Dragon Capital asserts that the semiconductor industry in Vietnam is poised for substantial growth, expecting a $1.66 billion increase and a compound annual growth rate of 6.12% from 2022 to 2027. This trend is attracting significant foreign investment, with prominent U.S. semiconductor companies such as Intel, Amkor, Marvell, and GlobalFoundries committing investments in the country. Additionally, the government is prioritizing talent development in the semiconductor field, aiming to nurture 50,000 semiconductor engineers.

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