“A diamond is a chunk of coal that did well under pressure.”

– Henry Alfred Kissinger - American diplomat and political scientist who served as the 56^th United States secretary of state

AFC Funds Performance Summary

The third quarter closed on a powerful note for Asian frontier markets with gains for the quarter being led by the AFC Asia Frontier Fund. Four of the best-performing markets globally in the third quarter were from the AFC universe. This does not surprise us, as we expected our markets to re-rate in the second half of 2025, and we are entering the final leg of the year on solid footing.

The final quarter of 2025 has begun on a very optimistic note as FTSE Russell announced that Vietnam will be included in its Emerging Markets Index from September 2026 onwards. This upgrade for Vietnam from frontier to emerging market status is very positive for the country, as it will open up the market to a new set of investors, which could lead to inflows of between USD 6-8 bn. We believe this upgrade supports the ongoing reforms in Vietnam, which should be positive for both our AFC Asia Frontier Fund and AFC Vietnam Fund.

Pakistan, Sri Lanka, Vietnam, and Oman Among the Top 10 Performing Markets Globally in 3Q25 (in USD)

AFC Quarterly Webinar on Thursday, 30^th October 2025

AFC Funds and Asian frontier markets have gained a lot of momentum in the second half of the year as our markets overcame the initial trade and geopolitical uncertainties that took place in the first half of 2025. Our funds and markets are entering the final quarter of the year with a very promising outlook.

Please join us for our quarterly update on Asian frontier markets where we will discuss these significant developments such as the performance and outlook for our AFC Asia Frontier Fund, AFC Iraq Fund, AFC Uzbekistan Fund, and AFC Vietnam Fund.

The speakers on the webinar will be:

• Thomas Hugger, CEO & Fund Manager
• Ruchir Desai, Co-Fund Manager of the AFC Asia Frontier Fund
• Ahmed Tabaqchali, Chief Strategist of the AFC Iraq Fund
• Scott Osheroff, CIO of the AFC Uzbekistan Fund
• Vicente Nguyen, CIO of the AFC Vietnam Fund

The webinar will highlight the following key points:

• Drivers of performance so far in 2025
• Outlook for 4Q25 and 2026
• Key country picks for the AFC Asia Frontier Fund for 2026
• Positive catalysts and key concerns for the future
• Outlook for the AFC Asia Frontier Fund, AFC Iraq Fund, AFC Uzbekistan Fund, and AFC Vietnam Fund

The webinar will be held on Thursday, 30^th October 2025 at 9:00 am NY, 1:00 pm UK, 2:00 pm Swiss and 9:00 pm HK/SG time and will be recorded for viewing at your convenience.

The webinar will run for 75 minutes, including a 30-minute Q&A session following the fund managers' presentations.

If you are unable to attend, please register nonetheless, and we will send you the link to the recording a day after the webinar.

Additionally, we will add the recorded webinar to our YouTube channel, where you can also find the previous webinars and other interesting AFC-videos. Subscribe to it NOW with the link below:

October 2025 Subscription Cut-Off Date

The next cut-off date for subscriptions for our funds will be 27^th October 2025. If you would like to know more about the subscription process, please get in touch with us at This email address is being protected from spambots. You need JavaScript enabled to view it.

Please find below the managers’ comments on each of our four funds for September 2025.

AFC in the Press

Upcoming AFC Travel

Thomas Hugger, Ruchir Desai, and Peter de Vries are based in Hong Kong, while Andreas Vogelsanger is based in Bangkok, Vicente Nguyen in Ho Chi Minh City, Scott Osheroff in Tashkent, and Ahmed Tabaqchali in London and Iraq. If you have an interest in meeting with our team at their homeports or during their travels, please contact Peter de Vries at This email address is being protected from spambots. You need JavaScript enabled to view it.

AFC Travel

AFC Uzbekistan Fund - Manager Comment

The AFC Uzbekistan Fund Class F shares returned +3.0% in September 2025 with a NAV of USD 1,317.78, bringing the year-to-date return to +4.9% and the return since inception (29^th March 2019) to +31.8%.

Capital Markets: The Bankers are Circling the Fee Trough

With the news of President Mirziyoyev’s working trip to the United States on 22^nd September 2025, the investment banking world is now circling Uzbekistan for what they see as potential fees galore. In meetings with BNY Mellon, Citigroup, Jefferies, BlackRock, Oppenheimer, Franklin Templeton, and Nasdaq, the discussion centred around these institutions being involved in Eurobond offerings, the privatisation process, and supporting the IPO process likely via joint bookrunning. 

There was also discussion around capital markets infrastructure development through assisting with modernising the Tashkent Stock Exchange through the creation of mechanisms for further protecting the rights of investors, increasing the transparency of the regulator, attracting international custodians, and introducing digital platforms. On the custodian front, with the current sandbox legislation, Bank of Georgia is already active and it increasingly looks like BNY Mellon and an international brokerage house could be offering custody in the near future as well. Such news is pivotal in developing the local capital markets, giving foreigners who want their securities held by a foreign custodian more comfort when investing. This naturally should also increase the flow of capital into the market, translating into a further re-rating.

For AFC, what was perhaps most interesting from President Mirziyoyev’s trip was his discussion with Nasdaq’s President and CEO, Adena Friedman, about their interest in modernising the Tashkent Stock Exchange and creating an integrated infrastructure for trading government bonds. While the Korean Stock Exchange is a minority owner of the Tashkent Stock Exchange (TSE), they have done little to push for its development and appear to be rent-seeking, charging fees for their software rather than developing the exchange, a similar strategy to what they have unfortunately done in other frontier markets. If Nasdaq gets involved, it would be very exciting, just as we saw top financial institutions involved in the development of the Astana International Stock Exchange last decade, but we will temper our expectations until we see some tangible announcements.

Tashkent Stock Exchange Management Change 

Prior to Nasdaq’s expression of interest to develop the TSE in late September, on 8^th September 2025, the Tashkent Stock Exchange announced a change in management. Mr Giorgi (George) Paresishvili didn’t have his contract renewed and stepped down as Chairman of the Board of the exchange following the completion of his three-year term. He was superseded by Mr Fayzulla Tashov, who has been appointed Acting Chairman of the Board. Mr Tashov began his career in 2001 at the Commercial Bank “Uzpromstroybank.” From 2005 until present, he has held leadership positions at the Central Securities Depository of Uzbekistan, and since 2024 he has served as Head of the Depository Services & Settlement Operations Department at the Central Securities Depository.

Regular readers may be wondering if this is good or bad news, for in his early days at the exchange, we sang George’s praises as a potential catalyst to transform the capital markets. The unfortunate reality is that he did not deliver any significant changes during his tenure, including getting equity quotations seamlessly hosted on Bloomberg (whose datasets were exceptionally flawed at the onset, and which we had to get involved via direct interaction with Bloomberg to ensure accuracy), nor did he execute on a connection with Euroclear.

While surely his hands were partially tied by not being able to amend legislation himself, we look forward to new management in time who can hopefully better execute. However, over time it has become increasingly clear that the driver behind a successful capital development strategy will ultimately be President Mirziyoyev’s privatisation drive. For without a successful sandbox comprised of international brokerages, custodians, and broader infrastructure to drive liquidity, the road ahead will be bumpy. Luckily, it has been clear from the beginning through multiple presidential decrees over the years that the President is indeed focused on Uzbekistan having a functional capital market. This is merely the growing pains of a frontier market.

On the current privatisation program, as we have said over the past several months, the Uzbekistan National Investment Fund, being managed by Franklin Templeton, will be the next catalyst to push the development on the capital markets, namely in custody, liquidity, and transparency. We are looking forward to attending their investor tour from 21^st to 24^th October 2025, seeing which investors stop by, and more importantly, the government’s strategy to make this listing a success, paving the path for future successful listings.

At the end of September 2025, the fund was invested in 23 names and held 9.0% in cash. The portfolio was allocated to Uzbekistan (90.9%) and Kyrgyzstan (0.1%). The sectors with the largest allocation of assets were financials (53.2%) and materials (18.4%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 3.56x, the estimated weighted harmonic average P/B ratio was 0.61x, and the estimated weighted average portfolio dividend yield was 3.16%.

 AFC Asia Frontier Fund - Manager Comment

The AFC Asia Frontier Fund (AAFF) USD A-shares returned +2.7% in September 2025, reaching an all-time high NAV of USD 2,200.80. The MSCI Frontier Markets Asia Net Total Return USD Index returned +2.0%, while the MSCI Frontier Markets Net Total Return USD Index went up by +1.2%, and the MSCI World Net Total Return USD Index increased +3.2%. Year to date, the fund has delivered a +15.1% return. The performance of the AFC Asia Frontier Fund USD A-shares since inception on 30^th March 2012 now stands at +120.1% while the MSCI Frontier Markets Asia Net Total Return USD Index returned +13.5% during the same period, showing an outperformance of +106.6% since inception. The fund’s annualised performance since inception is +6.0%. The broad diversification of the fund’s portfolio has resulted in lower risk with an annualised volatility of 10.4% and a correlation of the fund versus the MSCI World Net Total Return USD Index of 0.49, all based on monthly observations since inception.

The third quarter ended with another positive monthly performance from the AFC Asia Frontier Fund. Gains were led by Pakistan, Mongolia, Sri Lanka, Uzbekistan, and Cambodia. Key negative contributors to performance were Vietnam and Bangladesh.

Pakistan was the best-performing market globally in the third quarter of 2025, with a USD gain of +33% and this is a sign of the ongoing economic recovery taking place in the country and also the confidence that investors have with respect to the economic impact of the recent floods being manageable compared to the floods that struck in 2022.

The AFC Asia Frontier Fund’s gains in Pakistan this year have been led by Lucky Cement, which is also the fund’s largest stock position. Lucky Cement’s stock price has rallied not only in 2025 but also over the past few years, partly thanks to its very attractive valuation but also because the company is perfectly leveraged to an economic recovery in Pakistan due to its leading position in industries like automobiles, cement, chemicals, and power, all of which should benefit from an improving economy.

Furthermore, Lucky Cement’s profitability has also been supported by its international cement businesses, especially in Iraq, where it is witnessing significant momentum, which has also led to a new planned capacity expansion that will come online in the next few quarters. Lucky Cement trades at an estimated 2025 P/E ratio of 8.0x.

Lucky Cement in Pakistan is the AFC Asia Frontier Fund’s Largest Stock Position

The economic momentum in Sri Lanka maintains its pace as GDP growth in 2Q25 came in better than expected at 4.9%. Economic growth remains broad-based as both business and consumer demand remain robust, while very strong tourist arrivals also have a positive impact on the overall economy. With the overhang of U.S. reciprocal tariffs lifted in August, it would not be surprising to see strong GDP growth in the second half of 2025 as well, since the ongoing economic momentum in Sri Lanka remains sound.

Another good news for the Sri Lanka recovery story was the sovereign credit rating upgrade by S&P out of the restricted default status. This decision is another signal that Sri Lanka’s economy remains on the right track and is becoming more visible to credit rating agencies.

GDP Growth in Sri Lanka Remains Robust and Ahead of Expectations

During the month we were on the ground in Kazakhstan, Oman, and Vietnam. Ruchir participated in a mine tour held in Kazakhstan by Kazatomprom, which is the world's largest miner of Uranium, in which the fund is a shareholder.

After the mine tour in the south of Kazakhstan, Ruchir also visited Almaty and met with Halyk Bank, which is the fund’s second-largest stock position. Despite Halyk Bank’s stock price having rallied by 54% over the past year, the stock trades at an attractive valuation with a P/E ratio of only 3.6x, a P/B ratio of 1.2x and a dividend yield in USD of 17.5%.

At the Entrance of Kazatomprom Mine Site in Southern Kazakhstan

Ruchir Desai with the Management Team of Halyk Bank at its Headquarters in Almaty

In Vietnam, we met with 17 companies in Hanoi and Ho Chi Minh City. The key takeaway from the visit was that the government is showing significant intent in supporting economic growth via higher infrastructure spending and policy reform. This was evident on the ground as companies were significantly more optimistic on their outlook compared to our visit six months ago, before the announcement of U.S. reciprocal tariffs. The numbers reflect this growing optimism with GDP growth coming in for the first nine months of 2025 very strong at +7.9%

Furthermore, with FTSE Russell announcing that Vietnam will be upgraded to its Emerging Market Index from September 2026, investor interest towards the Vietnam story should only increase, as this upgraded status will open up Vietnam to a new set of investors who could not gain exposure to Vietnam until now due to its frontier market classification.

We expect that large cap stocks will gain more attention from international investors because of this announcement, and the AFC Asia Frontier Fund is very well exposed to Vietnamese blue chip companies.

Ruchir Desai with Management Team of FPT Corp. at its Headquarters in Hanoi

Thomas attended an investor conference in Muscat, Oman, which was attended by over 1,100 people, mainly from the GCC region. We made our first investment for the fund in Oman back in July 2025, since we are intrigued by the cheap valuation of the market: the P/E ratio is 9.1x and the dividend yield is 5.9%. Oman went through difficult times with the debt to GDP ratio peaking at about 68% in 2020, and now the same ratio is down to 35%. That led to the increase of Oman’s credit rating back to investment grade in late 2024 and 2025 to Baa3 (Moody’s) and S&P to BBB-. We expect that this will ignite more interest from GCC investors in the near future, especially from Saudi Arabia.

The best-performing indexes in the AAFF universe in September were Pakistan (+11.5%) and Sri Lanka (+3.7%). The poorest-performing markets were Bangladesh (−3.2%) and Laos (−2.0%). The top-performing portfolio stocks this month were a technology company focussing on Asian frontier countries (+67.2%), a gold miner in Mongolia (+34.5%), a gold producer in Cambodia (+32.8%), a Pakistani tobacco company (+23.0%), and a Pakistani power equipment producer (+18.7%).

In September, the fund added to existing positions in Bangladesh and exited a Mongolia-focussed gold explorer.

At the end of September 2025, the portfolio was invested in 56 companies, 2 funds, and held 2.0% in cash. The two biggest stock positions were a cement producer in Pakistan (4.8%) and a bank in Kazakhstan (3.6%). The countries with the largest asset allocation were Pakistan (18.6%), Sri Lanka (14.3%), and Bangladesh (11.0%). The sectors with the largest allocation of assets were financials (36.3%) and consumer goods (20.0%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 6.63x, the estimated weighted harmonic average P/B ratio was 1.30x, and the estimated weighted average portfolio dividend yield was 3.80%. The fund’s portfolio carbon footprint is 0.19 tons per USD 1 mn invested.

AFC Iraq Fund - Manager Comment

The AFC Iraq Fund Class D shares returned +0.4% in September 2025 with a NAV of USD 2,315.29, underperforming its benchmark, the Rabee Securities RSISX USD Index (RSISUSD index), which gained 1.0% during the month. The fund gained 43.5% in 2024 on the back of a stellar performance in 2023 of +110.4%. The fund is up by 12.8% for the year versus the index, which went up by 5.3%. Since inception, the fund has gained 131.5% while the RSISUSD index is up by 57.8%, an outperformance of 73.7%, achieving more than double the performance of the index. The annualised return since inception of the fund stands at +8.5% p.a.

The month’s much hotter than usual temperatures, coupled with the much more than usual frequent power cuts, had a negative effect on the average daily turnover, which dropped sharply from that of the prior month, and was about half the average daily turnover for the prior 12 months. Promisingly, the low volumes did not have a negative effect on prices, and the RSISX USD Index traded mostly at the upper end of its medium-term uptrend. As such, this supports the thesis that the market’s technical picture continues to be positive, and that the RSISX USD Index is continuing with the process of consolidating its gains that started in December 2024, following a blistering 35.9% three-month rally. While this consolidation could continue over the next few weeks, the likely consolidation or pullback should be within its multi-month uptrend (chart below).

Rabee Securities U.S. Dollar Equity Index and Daily Turnover

Even More of Iraq, As Seen Through a Visitor’s Eyes

As first mentioned, three months ago, Thomas Hugger visited Iraq at the end of May 2025, and with me, embarked on a tour of the country that included business visits, cultural, and historic tours. Then we reviewed our visit to the Iraq Stock Exchange (ISX), the Bank of Baghdad, and Baghdad Soft Drinks, which were also featured during the AFC Iraq Fund section of Asia Frontier Capital’s latest quarterly webinar on 24th July 2025, providing its regular “Asian Frontier Markets Update”. Two months ago, we reviewed our visit to some of Baghdad’s old districts (Al-Madrasa Al-Mustansiriya, Al-Mutanabbi Street, and Al-Shawaka), the ancient cities of Babylon, and Ctesiphon. Last month, we reviewed our visit to the ancient city of Ur, the Marshes, and the meeting point of the Tigris and Euphrates rivers forming the Shatt Al-Arab at Al-Qurnah. This month reviews our visit to Iraq’s third-largest city, Basra, and Thomas’s presentation to a business school in Baghdad. Our guide, as for the prior tours of Babylon, Ctesiphon, Ur, the Marshes, and Al-Qurnah, was Ali Ghanem Sarhan, one of my students at Baghdad Business School (BBS), who is now an independent freelance tour guide specialising in cultural and historical tours. His rich Instagram account (@alighanim.1) chronicles his criss-crossing the country with tourists from all over the world.

Basrah is the country’s third largest city, familiar to many from the fabled “One Thousand and One Nights”, and the adventures of “Sinbad the Sailor”, the city’s best known fictional character. The city was modern Iraq’s main access to the sea through Shatt Al-Arab (River of the Arabs) –Iraq is almost landlocked, with a coastline less than 60 km long, squeezed between the Iranian and Kuwaiti borders, and with no natural harbours or bays. As such, its access to the sea is convoluted, with the Shatt Al-Arab featuring heavily, either through Basra’s ports, or the man-made ports built on small fishing villages on the tiny coastline paralleling the Shatt’s path as it discharges to the Gulf –such as Iraq’s primary deep water of Umm Qasr, and the major ongoing construction of the multi-billion dollar Al-Faw Grand Port that is part of Iraq’s ambitious “Development Road” project, designed to connect Asia to Europe.

Basra was founded in 638 as a military fort by Islam’s second Caliph. Its strategic location with its easy access to Shatt Al-Arab, the Tigris and Euphrates, and the Gulf played a crucial factor in its development as a major metropolitan and a cultural centre. The flip side of this location was perennial conflict, often being a battlefield during wars, from its early days right through the twentieth century –the British invasion of Iraq in 1914 was through Basra, as was the U.S. invasion in 2003. The city was heavily damaged during the Iraq-Iran war in the eighties and suffered during the country’s civil war post 2003 – with the years of neglect in between these conflicts, and their aftermath taking a heavy toll on the city.

We headed to Basra late in the evening following our stopover at Al-Qurnah, the last part of the journey to Ur, and the Marshes. Along the 70 km drive, in the distance we witnessed the massive flames from oil wells, made from flaring, i.e., the burning of natural gas, a by-product of oil production from the country’s largest oil fields that lights the sky at night. The location of some of the country’s super-giant fields among the world’s major ones, such as Rumaila or Majnoon near Basra, has turned it into a major petroleum city and the country’s main oil export route. Sadly, the proximity to such wealth, and Iraq’s high flaring rates that accounted for 12% of the world’s total flare volumes in 2024, brought misery to the city’s peoples and its environment from the effects of the toxic pollutants released with flaring –the subject of the BBC documentary “Under Poisoned Skies” in 2023.

A View from Space

Thomas notes: “I have always seen the flames from far above out of an airplane window when flying over the Middle East. Now I saw them with my own eyes on the ground in Iraq, and I was asking myself: “Why are they doing that? Burning the (now) valuable gas? Why can't they catch it for one entire day on behalf of AFC and invest the sales proceeds into our AFC Iraq Fund? The fund size would more than triple (!) since, according to ChatGPT, Iraq flares about 1.2 to 1.5 billion cubic feet a day which is, based on a price of USD 0.01 / cubic feet, worth about USD 12 million to 15 million.”

We were exhausted by the time we arrived at Basra late at night and were happily surprised by the hustle and bustle of a big city that greeted us. Lights everywhere, roads jam-packed with cars, shops and restaurants were open and full of people, and construction activity was everywhere in a replay of that of Baghdad, yet more recent and indicating an early development phase of this beautiful city.  After checking in at one of the new hotels, we headed for a late dinner of kebab, tikka, liver, hearts, and kidneys at the hotel’s rooftop restaurant, which gave us a wonderful view of the night sky in the city, which we had to view again in the morning.

A Late Night Rooftop View of Basra

An Early Morning Rooftop View of Basra

The next morning, after checking out, we went to a nearby coffee shop, that could have been in any city in the world. Sufficiently caffeinated and energised, we started our whistlestop tour of Basra.

A Short Drive, and Morning Coffee, Basra

The first part of the tour was a boat ride in Shatt Al-Arab that, despite the extreme heat, was wonderful. It took us under the Muhammad Baquir Al-Sadr Bridge, connecting Basra to its suburbs, passed by many shipwrecks from the Iran-Iraq war, and finally gave a close-up view of the wreck of the 121-meter long “Al-Mansur”, one of the yachts of the pre-2003 regime’s president, it capsized and is left abandoned in the Shatt.

A Boat Ride in Shatt Al-Arab

Next was a visit to the old parts of Basra, which sadly show the signs of the decades of conflict and neglect. It started with a visit to a sort of city museum where Thomas discovered in a wardrobe an old Swiss army rifle his father used to have when serving in the Swiss army and ended with a visit to “Saint Thomas Chaldean Catholic Church”, built in 1883 and happily is undergoing renovation.  Thomas explained to the lady who was showing us around that he visited the saint’s burial site in the San Thome Church, in Chennai, India. While not directly connected, it brought to mind Basra’s historic and extensive trade linking India with the region.

Old Basra

The last part of Thomas’s visit to Iraq was a lecture that he gave about investments in frontier markets to the students of Baghdad Business School (BBS); a school focused on empowering Iraqi youth by providing practical, high-quality education that bridges the critical skills gap in the private sector. I was fortunate to be among its founders in 2020, and since then, I have taught introductory business and macroeconomic classes every year. From its small start with a cohort of 17 students, the school has grown steadily every year, as can be seen in the most recent graduation ceremony in October 2024. Thomas notes: “It was my utmost pleasure to tell my “war stories” about investing in Asian frontier markets to the very attentive crowd of young students, and to my surprise, I learned that some of the students are already investing in the Iraqi stock market, which made me really very happy. It also shows the confidence that (young) local investors have now in the “new Iraq” and the future development of the country.”

A Lecture at Baghdad Business School

At the end of September 2025, the AFC Iraq Fund was invested in 8 names and had a cash level of 2.3%. The fund invests in both local and foreign-listed companies that have the majority of their business activities in Iraq. The markets with the largest asset allocation were Iraq (96.0%), Norway (1.5%), and the U.K. (0.2%).

The sectors with the largest allocation of assets were financials (70.5%) and communications (17.5%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 6.72x, the estimated weighted harmonic average P/B ratio was 2.05x, and the estimated weighted average portfolio dividend yield was 7.18%. The fund’s portfolio carbon footprint is 0.06 tons per USD 1 mn invested.

AFC Vietnam Fund - Manager Comment

The AFC Vietnam Fund returned −1.1% in September with a NAV of USD 3,707.59, bringing the 2025 return to +6.9% and return since inception to +270.8%. This month, the fund outperformed the benchmark, the Ho Chi Minh City VN Index, which lost 1.5% in USD terms. The fund’s annualised return since inception stands at +11.8% p.a. The broad diversification of the fund’s portfolio resulted in an annualised volatility of 14.78%, a Sharpe ratio of 0.66, and a low correlation of the fund versus the MSCI World Index USD of 0.49, all based on monthly observations since inception.

Market Developments

FTSE Russell announced that Vietnam will be included in its Emerging Markets Index from September 2026. This upgrade for Vietnam from frontier to emerging market status is very positive for Vietnam as it will open up the market to a new set of investors, which could lead to inflows of between USD 6-8 bn. We believe this upgrade supports the ongoing reforms in Vietnam, which should be positive for our AFC Vietnam Fund and also for our AFC Asia Frontier Fund.

The VN-Index surged for four consecutive months, making a short-term correction both healthy and necessary to build momentum for stronger acceleration in Q4/2025 and 2026. Despite the pause, the market remains firmly supported by Vietnam’s robust economic fundamentals. According to Military Bank Securities JSC (MBS), one of the country’s top five brokers, third-quarter GDP growth is estimated at 8.6–8.9%, the highest in a decade, with a full-year 2025 growth forecast of 8.0–8.3%. Key macroeconomic indicators also reflect broad-based strength in the first eight months of 2025, with exports rising by 14.8%, FDI registrations increasing by 27.3%, public investment growing by 26.9%, and tourism expanding by 21.7%.

On 2^nd April 2025, President Trump reignited global trade tensions by imposing steep tariffs on numerous countries, causing widespread financial market disruptions worldwide. Vietnam, along with most ASEAN nations, now faces U.S. import tariffs of around 19–20%, while China and India are hit with rates as high as 50%. Many economists initially warned that such measures would be a heavy burden for all affected economies, including Vietnam. However, the actual impact has proven uneven—while some countries face significant disadvantages, others, including Vietnam, may gain competitive advantages over their rivals.

Relative Trump Tariff Advantage - Trade Weighted Own Tariff Hike vs Competitors (%)

As the chart illustrates, Vietnam enjoys significantly greater relative advantages compared to most other ASEAN countries—including Thailand, Indonesia, Malaysia, the Philippines, and even Singapore. These advantages have defied earlier forecasts predicting a slowdown in Vietnam’s export growth following President Trump’s imposition of a 20% tariff on Vietnamese goods. Despite the new tariff rates taking effect in July, Vietnam’s export performance has remained remarkably strong, with August exports rising 14.5% year-on-year. Notably, exports to the U.S. reached USD 99.1 billion in the first eight months of 2025, representing a 26.4% year-on-year increase. The following example highlights how Vietnam continues to gain competitive advantages over its regional peers despite the tariff headwinds.

Based on this Goldman Sachs analysis, Vietnamese export companies are expected to benefit significantly from the shifting tariff burden dynamics anticipated by October 2025. While U.S. businesses currently bear approximately 65% of tariff costs as of June 2025, this share is projected to plummet to just 8% by October. The dramatic shift will see U.S. consumers absorbing most tariff costs (rising from 22% to 67%), while foreign exporters will shoulder about 25% of the burden on average. However, Vietnamese companies are positioned even more favourably since the majority of products are low-value goods where substantial profit margins are captured downstream in the U.S. market. For example, Nike shoes manufactured in Vietnam for USD 20 and sold at retail for USD 100 create room for tariff absorption—a 20% tariff adding USD 4 to the production cost can be more easily absorbed by U.S. retailers or passed to consumers as a modest USD 4 price increase rather than forcing Vietnamese manufacturers to cut their margins. This redistribution suggests that Vietnamese exporters, who have been competing against tariff-disadvantaged Chinese competitors, may find themselves in an increasingly favourable position as U.S. importers and consumers absorb more of the tariff impact, potentially making Vietnamese goods more price-competitive in the U.S. market without Vietnamese companies having to adjust their pricing strategies significantly.

Minh Phu Group (MPC) Visit

In September, we visited Minh Phu Group (MPC), the world’s largest shrimp exporter with a 20% global market share. CEO and founder Mr. Le Van Quang explained that the business environment in 2025 has become exceptionally favourable for the company, despite the 20% U.S. tariff on Vietnamese goods.

According to Mr Quang, Vietnam’s shrimp industry enjoys a significant competitive edge over its key rivals, India and Indonesia, both of which are facing major headwinds. India is subject to a 50% U.S. import tax, while in September 2025, the FDA issued a warning advising the public not to consume certain imported frozen shrimp from an Indonesian producer after detecting a carcinogenic substance. This has raised safety concerns among U.S. consumers and further boosted demand for Vietnamese shrimps, including Minh Phu’s products.

MPC also benefits from a 0% U.S. anti-dumping tax, setting it apart from other Vietnamese exporters. In addition, higher retail shrimp prices in the U.S. have helped offset the 20% tariff. As a result, the company is receiving a surge of orders from U.S. clients. “2025 is the most advantageous year in MPC’s history”, Mr Quang emphasized.

During our three-day visit, MPC showcased several strategic expansion projects designed to strengthen its market leadership and drive profitability:

• Automation System Upgrade

MPC will install a new automation system across its factories to reduce labour needs by 25–30% and increase processing capacity by 20%. Current annual capacity is about 50,000 tons, which will rise to 60,000 tons once the system is operational. The company is also exploring the use of AI and robotics, with plans to deploy robots in production by the end of 2025.

• New Minh Phat Factory (1Q2026)

A new factory in Ca Mau Province is scheduled to begin operations in late Q1 2026, raising the group’s total capacity to 100,000 tons per year. Equipped with full automation, the facility is expected to lower production costs by 20% compared to existing plants.

Minh Phat Factory

• MPBio Technology

After two years of R&D, MPC has successfully developed a proprietary shrimp farming technology that doubles the survival rate from 40% to 80%, significantly reducing farming costs and improving product quality.

• Seawater Pumping & Farm Expansion

In July 2025, MPC completed an ambitious seawater pumping project capable of delivering 4,500 m³/hour to its farms, while expanding the total shrimp farming area to 900 hectares. This project enhances water quality and improves shrimp survival rates—a potential game-changer for both MPC and the Vietnamese shrimp industry.

MPC Shrimp Farm

With these initiatives, MPC expects a strong earnings rebound in 2025 and projects record profits of VND 1,000–1,200 billion in 2026, cementing its position as the global “King of Shrimp”.

Vietnam's Stock Market Ignited by Blockbuster IPOs

Vietnam's stock market is experiencing an unprecedented IPO boom, driven by robust economic growth and a VN-Index approaching 1,700 points. Major listings from Hoa Phat Agriculture, Techcom Securities, Gelex Infra, C.P. Vietnam, and Highlands Coffee are attracting global investor interest.

Key IPO Highlights:

Hoa Phat Agriculture filed for a December 2025 HOSE listing, offering 30 m shares at a minimum price of VND 11,887 each. The agricultural leader produces 1 m eggs daily and farms 600,000 pigs annually. H1 2025 profit surged 2.3x YoY to VND 939 bn.

Techcom Securities completed Vietnam's largest securities sector IPO in September 2025, raising USD 410 m at a USD 4 bn valuation with 2.5x oversubscription from 26,000 investors.

Gelex Infra plans a Q4 2025 IPO with VND7,900 bn capital, managing stakes in Viglacera (50.21%) and Song Da Water. H1 2025 revenue grew 21.1% to VND 18,047 bn.

C.P. Vietnam, the Thai food giant's local arm, targets 2026 HOSE listing to expand operations. Vietnam drives 21% of CPF's offshore revenue.

Highlands Coffee, Vietnam's leading coffee chain with a 30% market share, plans an IPO for 2026-2027 to support international expansion under the Jollibee ownership.

With a competitive 15.8x P/E ratio and $47.5 bn in projected IPO value by 2027, Vietnam is solidifying its position as a dynamic investment destination.

At the end of September 2025, the fund’s largest positions were: Lam Dong Minerals and Building Materials (9.2%) – a building material supplier, Agriculture Bank Insurance (7.5%) – an insurance company, Minh Phu Seafood Corp (6.5%) – a seafood company, Thien Long Group (5.8%) – a manufacturer of office supplies, and TNG Investment and Trading JSC (5.4%) – an apparel manufacturer.

The portfolio was invested in 32 names and held 7.2% in cash. The sectors with the largest allocation of assets were financials (36.0%) and consumer (35.0%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 10.64x, the estimated weighted harmonic average P/B ratio was 1.46x, and the estimated weighted average portfolio dividend yield was 3.84%. The fund’s portfolio carbon footprint is 2.24 tons per USD 1 mn invested.

I hope you have enjoyed reading this newsletter. If you would like any further information, please get in touch with me or my colleagues at This email address is being protected from spambots. You need JavaScript enabled to view it.

With kind regards,

Thomas Hugger
CEO & Fund Manager

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