Vietnam's Strategic Pivot: A Geopolitical and Economic Battleground for Investors

As the U.S.-China rivalry intensifies, Vietnam has positioned itself as a resilient “third way” investment play in Southeast Asia, leveraging strategic partnerships with European powers like France to diversify its economic and security ties. Sector-specific opportunities in defense, civil nuclear energy, and critical minerals are emerging as Vietnam navigates geopolitical headwinds while mitigating tariff risks and securing access to advanced European technology. Here's why investors should act now.

The Geopolitical Pivot: Vietnam's Strategic Diversification
Vietnam's diplomatic overtures toward France—highlighted by President Macron's May 2025 visit—signal a deliberate shift to reduce reliance on China and the U.S. By deepening ties with France, Vietnam gains access to European capital, technology, and geopolitical support, all while avoiding overexposure to trade wars. This pivot creates asymmetric opportunities for investors in three key sectors:

1. Defense: A Shift from Russia to France
Vietnam has slashed its reliance on Russian arms from 90% to less than 10% post-2022, pivoting to Western partners like France. During Macron's visit, the two nations inked over a dozen defense agreements, including cybersecurity collaboration, anti-terrorism partnerships, and maritime security initiatives.

France's strategic moves—such as deploying a carrier strike group to the region in 2025—align with Vietnam's interests in countering Chinese territorial claims. Investors should note Vietnam's defense spending, projected to grow at 8-10% annually, and France's role as a supplier of advanced systems.

Investment Play: Look to French defense contractors like Thales (EPA: HO) or Vietnamese firms like [VND: VND1] involved in cybersecurity or maritime infrastructure.

2. Civil Nuclear Energy: A Green Transition with French Expertise
Vietnam's revival of its Ninh Thuan nuclear project—suspended since 2016—now includes France as a key partner. While Russia's Rosatom and the U.S. Westinghouse Electric remain competitors, France's Électricité de France (EDF) aims to leverage its expertise in low-carbon energy to secure a stake.

The project, expected to cost up to $10 billion, will provide 10% of Vietnam's electricity by 2030, reducing coal dependence. Vietnam's energy demand is projected to grow 9.3% annually, creating urgency for reliable baseload power.

Investment Play: Back EDF (EPA: EDF) or Vietnam's state-owned utility EVN (VND: EVN) as the Ninh Thuan project gains momentum. Infrastructure funds like the iShares MSCI Vietnam ETF (VNM) also offer exposure.

3. Critical Minerals: Securing Supply Chains for Green Tech
Vietnam's abundant reserves of lithium, cobalt, and rare earth elements position it as a critical node in global supply chains for batteries, semiconductors, and renewables. France's collaboration focuses on securing these minerals, reducing reliance on China-dominated supply chains.

With the EU-China trade war escalating, Vietnam's partnership with France—part of the Sapporo 5 uranium initiative—ensures resilient supply chains for advanced technologies.

Investment Play: Target mining firms like [VND: VNMINE] or European companies like French mining giant Eramet (EPA: ERA) with Vietnam exposure. ETFs tracking critical minerals (e.g., Global X Lithium ETF (LIT)) are also viable.

Mitigating Tariff Risks: The EU Advantage
Vietnam's $67 billion trade deficit with the U.S. (threatened by 46% tariffs in 2025) contrasts sharply with its growing EU ties. France's support—evident in Airbus' $7 billion deal for VietJet's 20 A330neo aircraft—highlights Europe's role as a counterbalance.

By aligning with Europe, Vietnam mitigates U.S. tariff risks while accessing advanced aerospace, rail, and nuclear tech. This “third way” approach ensures Vietnam remains a stable, growth-oriented market.

Why Invest Now?
Vietnam's strategic pivot offers a rare combination of geopolitical resilience, sector-specific growth, and diversification benefits. With defense modernization, nuclear energy revival, and critical minerals development all accelerating, investors stand to gain from:
- Geopolitical Stability: Reduced reliance on either U.S. or Chinese capital.
- Technological Upgrades: Access to European innovation in defense and energy.
- Commodity Upside: Critical minerals' demand tied to global green transitions.

The time to act is now. Vietnam's third-way strategy isn't just a diplomatic move—it's an investment thesis with clear upside in a fractured world.

Final Call to Action: Deploy capital into Vietnam's defense, nuclear, and critical minerals sectors through targeted equities, ETFs, or strategic partnerships. This is a high-reward, low-regret play in Asia's most dynamic geopolitical battleground.