Strategic Opportunities in Vietnam's Export-Driven Sectors Amid U.S. Trade Deal Progress

The Vietnam-U.S. trade negotiations, now in their critical phase, hold profound implications for Vietnam's export-led economy. With a record $123 billion trade surplus in 2024, Vietnam faces U.S. tariffs that could either stifle its growth or catalyze structural reforms. Recent progress, including $54.3 billion in bilateral agreements and delayed tariffs, suggests a path forward. For investors, this is a pivotal moment to assess opportunities in textiles, electronics, and agriculture—sectors poised to gain from reduced trade barriers and finalized terms.

Textiles: Riding the Wave of Tariff Relief

Vietnam's $26 billion textile exports to the U.S. in 2024 face a pivotal test. The U.S. demands strict rules of origin to prevent Chinese transshipment, requiring proof that fabrics are either domestically produced or sourced from non-Chinese suppliers. While this poses challenges—70% of fabrics come from China—the finalized terms could incentivize Vietnam to diversify suppliers and boost domestic production.

Investment Play: Vinatex (VGT.HM), Vietnam's largest textiles exporter, stands to benefit. Its vertically integrated model, including cotton farming and fabric production, reduces reliance on Chinese inputs. With a P/E ratio of 12x—below its five-year average of 15x—Vinatex offers value if tariffs ease.

Electronics: A Compliance-Driven Pivot

The electronics sector, now facing U.S. scrutiny over regional value content (RVC) requirements (35-40%), must adapt to survive. Vietnam's $4.15 billion in machinery and tech exports to the U.S. in 2025 highlight the sector's potential, but compliance costs are steep. Companies like FPT Corporation (FPT.HM), which partners with U.S. firms like Meta and Intel, are well-positioned due to their expertise in supply chain transparency and RVC documentation.

Investment Play: FPT's P/E of 18x reflects its growth potential, but risks include compliance delays. Investors should monitor its collaboration with U.S. tech giants, which could unlock new contracts.

Agriculture: A Green Harvest

Vietnam's agriculture sector, bolstered by $50.15 billion in energy and agri-tech deals with U.S. firms like Bayer, is set to expand. New rules mandating traceability and phytosanitary certificates align with U.S. standards, opening doors for exports like rice, coffee, and seafood. Vinamilk (VNM.HM), a dairy giant with U.S. distribution channels, trades at a P/E of 14x—cheap relative to its 20% EPS growth forecast.

Geopolitical Risks and Mitigation

The U.S. threat of tariffs up to 800% on solar panels and ongoing legal battles over reciprocal tariffs underscore risks. Investors must prioritize firms with:
1. Diversified markets: Companies like Vinamilk, which export 30% of dairy products to ASEAN and Europe, reduce overreliance on the U.S.
2. Compliance readiness: Firms with robust supply chain tracking systems (e.g., FPT's VNACCS integration) face fewer penalties.
3. Valuation discipline: Focus on P/B ratios below 1.5x (e.g., Vinatex at 1.2x) to guard against downside.

Conclusion: A Strategic Buy Signal

Vietnam's export sectors are at an inflection point. Finalized trade terms could unlock $90 billion in bilateral deals by 2025, driving corporate earnings and equity gains. Investors should prioritize firms like Vinatex, FPT, and Vinamilk—each offering a mix of undervaluation, U.S. exposure, and compliance strength. While geopolitical risks linger, the structural tailwinds of tariff relief and sector-specific reforms make Vietnam's export complex a compelling long-term play.

The time to position for this transformation is now.

Data as of June 2025. Past performance is not indicative of future results.