The Vaneck Vietnam ETF (VNM) is the main Vietnam stock market ETF that I find investors turn to when they first consider getting exposure to Vietnam shares.
Interestingly, more than a quarter of this ETF has holdings listed in global stock exchanges outside of Vietnam. These include shares listed in Taiwan, South Korea, Japan, China and Malaysia.
I therefore thought it would be an interesting exercise to find out a little more about some of these offshore holdings. I will begin with a brief look at their two largest holdings they have in Taiwan, which together represent circa 10% of this ETF.
WHY IS NIKE STOCK GOING DOWN? WTF DOES IT MEAN FOR VNM ETF?
Before I get into these two Taiwan stocks, why did Nike shares decline in September?
Stick with me, it is all related.
Vietnam factories, where Nike relies on in a major way, experienced major shutdowns of production recently due to Covid-19.
I shall revisit this issue later on in the blog post..
WHY MIGHT THE VNM ETF HAVE HOLDINGS OUTSIDE OF VIETNAM?
Being one of the earliest Vietnam ETFs that got going back in 2009, it would have been relatively uncertain how the future of the Vietnam stock market would evolve. In hindsight we now know that since then it has been a good story in terms of the growth in listings and liquidity.
Going back 12 years ago though, I can understand how an ETF provider would want to be cautious on their assumptions. The safer option was probably to have a structure like they do now. That is, to own some exposures that might be listed in the likes of South Korea, Taiwan, Japan etc so long as they still have a strong “Vietnam flavour”.
That means they can improve underlying liquidity, so crucial for any ETF product, by having more options of large cap stocks on major global exchanges they can invest in. If such stocks have for example the majority of their revenues, or assets, or production chains linked to Vietnam well it still kind of ticks the box for Vietnam exposure. Such companies in theory should be positively correlated to an improving Vietnam economic story.
If you want to go back and checkout my complete guide to the VNM ETF then refer to my recent post below:
COMPLETE GUIDE TO VANECK VECTORS VIETNAM VNM ETF
This post discusses further some of the structural differences between VNM ETF and other Vietnam fund products.
HOW HAVE THE VNM ETF HOLDGINGS OUTSIDE OF VIETNAM PERFORMED OF LATE?
Eclat Textile Company Share Price Chart

Feng Tay Enterprises Company Share Price Chart

The observations I wanted to make from the above charts is it is noticeable how shortly after June 30, they have been particularly weak.
By no coincidence of course, the 7-day covid-19 case numbers in Vietnam were averaging around 400 back near June 30. As the quarter came to an end around September 30, they were getting about 10,000 cases a day. Thanks to the vaccination rollout gaining momentum, case numbers have plunged since September 30 towards circa 3,000 daily cases.
Interestingly both of the above stocks appeared to be bottoming out after price declines from June 30. This occurred around the end of August which is roughly when covid case numbers had peaked in Vietnam.
Still, the relatively weak September quarter share price performance of these 2 Taiwan listed stocks would not have helped the VNM ETF during those 3 months. If you want to read a bit more about the relatively weak performance of VNM ETF versus other Vietnam fund products in 2021 I covered that in the below recent blog post.
VNM ETF PERFORMANCE VS OTHER VIETNAM ETFs, FUNDS & CEFs
VNM ETF has significantly lagged the performance of some other Vietnam funds in 2021 thus far.
WHY VNM ETF HAS HOLDINGS TAIWAN LISTED ECLAT TEXTILE COMPANY & FENG TAY ENTERPRISES COMPANY?
As further down I shed some light on the descriptions of these two companies it does become quite clear how they fit into the mandate of VNM ETF.
Eclat has all their garment production in Vietnam and Cambodia.
Feng Tay Enterprises has more than half of their production based in Vietnam. You may have read about some production shutdowns of this company in Vietnam if you follow the fortunes of Nike recently. Nike is very reliant on the fortunes of their production in Vietnam as about half of their volumes are produced there. In fact, Nike relies specifically on Feng Tay Enterprises for about a sixth of its production.
Now let’s take a closer look at these two companies:
VNM ETF HOLDING TAIWAN LISTED ECLAT TEXTILE COMPANY (TPE:1476)
Eclat Textile Company (TPE:1476) description – Provide the vertical integration supply chain including knitting, dyeing, finishing, and garment making. Specialize in functional elastic circular knitting fabrics and garments for performance and sportswear.
Whilst Eclat are headquartered in Taiwan, they have 2 fabric mill bases in Taiwan and Vietnam, and 17 garment factories spread across Vietnam and Cambodia.
ECLAT FINANCIAL OVERVIEW

Source: Eclat Investor Conference March 9th, 2021.
Eclat Textile Company (TPE:1476) PE Ratio – 27 times
Eclat Textile Company (TPE:1476) Dividend Yield – 1.9%
Source: Yahoo Finance
VNM ETF HOLDING TAIWAN LISTED FENG TAY ENTERPRISES COMPANY (TPE:9910)
Feng Tay Enterprises Company (TPE:9910) description – Feng Tay Enterprises Co., Ltd. was established in 1971 and focuses mainly on producing athletic shoes. Its headquarters, primarily for product development and human resources functions, is located at Yunlin Science and Industrial Park in Taiwan, while its factories are spread throughout China, Vietnam, Indonesia and India. Feng Tay Group currently has around 136,700 employees and produces more than one sixth of NIKE’s total annual sales volume.
I did promise earlier that I would explain how Nike’s recent share price performance is relevant to this blog post so you can note this recent news story. It covers the shutdown of Feng Tay’s production, this article appeared on August 16th.
Feng Tay’s Vietnam units staying shut – Taipei Times
To quote from the above article:
“As operations in Vietnam account for 56 percent of Feng Tay’s total capacity, followed by 20 percent in India and 14 percent in Indonesia, the company’s sales for this month and the entire third quarter might face pressure, analysts said.”
On September 23, CNBC noted the impacts to Nike in this article below:
Nike (NKE) Q1 2022 earnings beat, sales miss (cnbc.com)
Feng Tay Enterprises Company (TPE:9910) PE Ratio – 31 times
Feng Tay Enterprises Company (TPE:9910) Dividend Yield – 1.8%
Source: Yahoo Finance
THE EFFECT OF COVID-19 ON VIETNAM STOCK MARKET & NIKE
It is now very clear how the strict lockdowns in Vietnam were a big worry with Vietnam’s manufacturing sector. Certain sectors on share markets had a wide dispersion of performance in the September quarter due to this theme.
Other well know stocks on the Vietnam market fared much better than these two Taiwan listed stocks. Stocks such as Hoa Phat Group, FPT Corporation and Vinamilk just to name a few were not as directly sensitive to this thematic surrounding Vietnam covid lockdown in the September quarter.
THE GREAT RESIGNATION IN VIETNAM?
Some readers may have noted this heading just above trending recently across the globe. For those that are not familiar with the great resignation, it is about a surprisingly high number of workers looking to quit their jobs due to rethinking their priorities in life after the tough times we have dealt with due to covid.
Could this be occurring amongst Vietnam’s manufacturing sector?
Here are some recent news stories from October 4th and October 19th respectively
Industrial units in Vietnam’s HCM City hit by labour shortage – Fibre2Fashion
Many articles of late have mentioned how workers in HCMC had such a tough time during lockdown, they have fled to farm life in their hometowns towards the Mekong delta to be with their extended families.
I suspect this might only be problematic in the shorter term though. It also may not affect so much the companies I am referring to in this blog post. I note a comment from the second article above for instance here to quote “But foreign-owned enterprises would not have this problem since they have excellent HR policies that foster employee loyalty, he added.”
FINAL THOUGHTS
I think the VNM ETF has been somewhat unlucky holding some of these covid sensitive manufacturing plays in 2021 at times. The covid-19 delta variant came along which was a game changer. However now that the September quarter is behind us, having these “covid recovery” themed stocks could even be a good thing for VNM ETF going forward.
I have been very pleasantly surprised at the news flow since the beginning of September surrounding the covid case numbers and vaccination rollout in Vietnam and across South East Asia generally. I therefore wouldn’t be surprised if these two Taiwan listed stocks confirm the bottoming out trend that appeared to occur in late August, and positive sentiment continues. Markets can often look forward a full year ahead and on that front hopefully South East Asia is living more normally by then.
In mid September as I was observing the news flow getting a lot better I accumulated some stocks listed in HK and Singapore that may benefit from this improving theme. In some blog posts in the future I might try and mention them briefly as although they are not listed on the Vietnam stock exchanges, they are relevant. They might be loosely tied in with an improving Vietnam, or at least neighboring countries.
Is Vietnam a good investment?
To stay updated on my journey on exploring how to best invest in the Vietnam stock market, please feel free to enter your email address in the subscriber area below to be notified of posts I make. (I will not spam your inbox, expect perhaps usually one relevant weekly update).
Thanks!
One thought on “ARE THE HOLDINGS OF VANECK VIETNAM (VNM) ETF REALLY IN VIETNAM?”