France-Vietnam Strategic Partnerships: Navigating Opportunities and Risks in Aviation, Nuclear, and Defense Sectors

The May 2025 state visit of French President Emmanuel Macron to Vietnam marked a pivotal moment in deepening bilateral ties, with implications for investors in European infrastructure, defense, and Vietnam's export-driven economy. The 30 agreements signed or advanced during the visit—including aviation deals, nuclear energy frameworks, and defense partnerships—signal a strategic realignment in Southeast Asia. For investors, this presents sector-specific opportunities amid geopolitical risks, particularly as U.S.-Vietnam trade tensions and regional competition loom large.

Aviation: Airbus's Vietnam Play vs. U.S. Boeing Pressure

The centerpiece of the visit was progress on a VietJet-Airbus collaboration, including 20 A330neo wide-body aircraft. This deal underscores Airbus's dominance in Vietnam's skies, where its aircraft already account for 86% of the local fleet. The partnership positions Airbus to capitalize on Vietnam's aviation growth, driven by rising middle-class travel and regional connectivity.

However, the U.S. has pressured Vietnam to buy 250 Boeing planes to offset its $100 billion trade deficit with Washington. This creates a geopolitical tension: while Vietnam's alignment with France shores up European influence, compliance with U.S. demands could divert orders from Airbus.

Investors should monitor:
- Airbus's order backlog and its ability to sustain Vietnam's market share.
- Boeing's stock performance, which faces headwinds as geopolitical leverage weakens demand.

Nuclear Energy: France's Bid to Lead Vietnam's Green Transition

Vietnam's renewed push for nuclear energy—abandoned in 2016 over costs—is now a focal point. France, through EDF's EPR2 reactors, seeks to position itself against rivals like Russia (Rosatom), Japan (JINED), and South Korea. Vietnam's net-zero pledge by 2050 and reliance on coal-fired power make nuclear a critical component of its energy mix.

The EU's Just Energy Transition Partnership (JETP), which funds green projects in Vietnam, aligns with French firms' expertise in renewable and nuclear tech. However, delays in finalizing reactor deals and bureaucratic hurdles could stall progress.

Defense and Infrastructure: High-Stakes Investments in Rail and Satellites

France aims to secure a role in Vietnam's $67 billion North-South high-speed rail project, competing with local firms like VinGroup's $61 billion proposal. Meanwhile, satellite partnerships—replacing Vietnam's aging VNREDSat-1 with Airbus and Thales—highlight France's ambitions in tech collaboration.

These projects align with Vietnam's need for modern infrastructure but face risks:
- U.S. tariff threats: Washington's proposed 46% tariffs on Vietnamese exports (if trade imbalances persist) could divert funds from European projects.
- Regional competition: China and Japan's cheaper financing terms pose a challenge to French firms' margins.

Trade Dynamics: EU-Vietnam Ties vs. U.S. Pressure

The EU-Vietnam Free Trade Agreement (EVFTA) has boosted European exports, but the unratified Investment Protection Agreement (EVIPA) remains a barrier to investor confidence. Vietnam's “yellow card” status from the EU over seafood sustainability further complicates trade.

Vietnam's balancing act—meeting U.S. demands while deepening ties with Europe—creates volatility. Investors in EU-based infrastructure firms (e.g., Vinci, Bouygues) and Vietnam's export-driven sectors (e.g., textiles, electronics) could benefit, but must navigate tariff risks.

Investment Thesis: Play the Franco-Vietnamese Playbook, but Watch the Risks

Go Long on:
1. European defense/infrastructure firms (EDF, Thales, Airbus) benefiting from Vietnam's strategic modernization.
2. Vietnamese export stocks (e.g., Masan Group, VinGroup) that align with EU trade flows, provided they hedge against tariff risks.

Avoid:
- Boeing (BA): U.S.-Vietnam tensions could disrupt orders, and Airbus's entrenched position limits upside.

Final Caution: Geopolitical Volatility Ahead

While Macron's visit solidified France's role as Vietnam's top EU partner, the path is fraught. U.S. tariffs, bureaucratic delays, and regional competition could derail projects. Investors must weigh the long-term potential of Franco-Vietnamese collaboration against near-term execution risks.

The bottom line: Now is the time to position in European firms and Vietnam's export sectors—but keep a close watch on Washington's next move.