In the latest Funds Fanatic podcast, Dragon Capital’s Dominic Scriven discusses the anti-corruption drive that shook Vietnamese markets last year and the prospects for the pioneering £1.4bn investment trust Vietnam Enterprise Investment Limited (VEIL ).

Scriven founded Dragon Capital, the oldest independent asset manager in the country, after moving to Vietnam in the early 1990s, having worked for firms including M&G in Hong Kong. 

In a 39-minute interview, he discusses the lessons learnt since launching VEIL in 1995 and the challenges of portfolio management in what is still considered a frontier market. 

‘The direction has never been in doubt – the timing most certainty has been,’ Scriven says. 

Vietnam’s economy was one of the fastest growing in the world in 2022, delivering 8% growth. But its stock market was down 32% in local currency terms (26% in sterling) with both the retail traders (who dominate the market) and international investors exiting during an anti-corruption drive that saw the head of the Ho Chi Minh stock exchange dismissed. 

After a rebound since the start of this year, shares in VEIL are now down 23% over one year but up 25% over five. That has seen the trust fall behind the gains for rivals VinaCapital Vietnam Opportunity (VOF ), 51.5%, and VietNam Holding (VNH ), 38%, over the same period. 

Scriven talks about the key issues at play and highlights one recent scandal that may affect Eximbank, which Dragon invests in.

But while markets may have run ahead of the local capacity to regulate for a time, Scriven says Vietnam’s long-term growth remains very much intact and argues that rising prosperity will continue to boost the market’s key banking and real estate sectors.