Rising Tech Scene in Vietnam Could Boost This ETF

The Asia-Pacific region comprises myriad economies that can be considered technology powerhouses. These include China, India, Japan, South Korea, and Taiwan chief among them.

Additionally, alhough much smaller in economic heft than those nations, Vietnam is increasingly making its mark in that region’s tech scene. The country’s tech rise could be a long-term boon for assets such as the VanEck Vietnam ETF (VNM).

VNM, which follows the MarketVector Vietnam Local Index, has no direct technology exposure at the moment. That’s mostly because the bulk of Vietnamese technology or consumer internet companies isn’t yet publicly traded firms. It’s possible that over time, the ETF’s underlying index will evolve to better reflect the country’s growing tech sector.

VNM Can Benefit from Vietnam Tech

VNM doesn’t yet have direct allocations to technology stocks. However, it has the potential to benefit from the rise of Vietnam’s tech landscape. For example, the ETF allocates 28% of its weight to financial services stocks. That’s its largest sector exposure. Many of those firms may be involved in providing capital and services to Vietnamese tech firms. Data confirms that’s a potentially potent point.

“Vietnam has the fastest-growing digital economy in Southeast Asia. By 2025 it could be worth US$49 billion, with an average annual growth rate of 31%, by 2025. Nearly three-quarters (73%) of the population are internet-enabled, rising from around 2% in 2002, making Vietnam the 12th biggest internet user worldwide,” according to Dragon Capital.

Data points such as those are supporting elevated foreign direct investment in Vietnam. And those can have trickle-down effects to other companies and sectors, including those represented in VNM. Many familiar Western tech companies are seeing opportunity in the Southeast Asian nation, including in the crucial semiconductor space.

“The semiconductor sector in Vietnam is expected to grow by US$1.66 billion and at a compound annual growth rate of 6.12% between 2022-27. This makes Vietnam a destination for foreign direct investment. Numerous U.S. semiconductor powerhouses like Intel, Amkor, Marvell, and GlobalFoundries have pledged investments in Vietnam. Concurrently, the government is promoting talent development in this domain, aiming to cultivate 50,000 semiconductor engineers,” concluded Dragon Capital.

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