Vietnam's Stock Market Rally: A Strategic Buy-In Amid Structural Reforms and Foreign Fund Inflows

Vietnam’s stock market has emerged as a compelling investment opportunity in 2025, driven by a confluence of structural economic reforms, robust foreign capital inflows, and a potential reclassification from frontier to emerging market status. With GDP growth hitting 7.52% in the first half of 2025—fueled by surging services, manufacturing, and infrastructure sectors—the country is demonstrating its resilience amid global trade uncertainties [3]. The VN-Index, Vietnam’s benchmark stock index, posted a 3.1% return in June 2025, reflecting investor optimism about reforms like Resolution No. 68 and 76, which aim to enhance private sector development and governance [4].

Structural reforms have been central to Vietnam’s economic transformation. The OECD Economic Survey of Vietnam 2025 emphasized the need to boost productivity and integrate local firms into global value chains, a strategy that has already attracted $11.7 billion in foreign direct investment (FDI) in H1 2025, up 8.1% year-on-year [5]. These reforms, coupled with public investment in infrastructure and green technology, have created a fertile ground for long-term growth. For instance, Hoa Phat Group (HPG) saw a 5.8% stock price increase due to strong domestic steel demand, while Techcombank (TCB) surged 11.7% amid anticipation of its securities subsidiary’s IPO [4].

Foreign portfolio investment inflows have also gained momentum. In July 2025 alone, foreign investors net bought $325 million in Vietnamese stocks, the highest level since early 2023 [3]. This trend is partly attributed to the anticipation of Vietnam’s potential upgrade to emerging market status by FTSE Russell in September 2025. Such an upgrade is projected to attract $1 billion in passive ETF inflows and over $5 billion in active capital, given Vietnam’s attractive P/E ratio of 15.2—well below the emerging market average of 16.1 [1]. JPMorgan Chase has already upgraded Vietnam to “overweight,” forecasting the VN Index to reach 1,500–1,600 points by year-end [5].

The U.S.-Vietnam trade agreement, signed in July 2025, introduced short-term volatility but also signaled long-term stability. While a 20% tariff on most Vietnamese exports to the U.S. poses challenges, the government has pledged tax breaks and credit support for affected sectors like textiles and electronics [4]. This proactive approach has reinforced investor confidence, with FDI inflows in the first seven months of 2025 reaching $24.09 billion—a 27.3% year-on-year surge [2]. High-quality FDI from U.S. and European firms, including ExxonMobil and Qualcomm, underscores Vietnam’s appeal as a manufacturing and technology hub [5].

Structural governance reforms, such as the provincial merger and streamlined administrative processes, have further enhanced Vietnam’s business environment [5]. These changes align with the country’s ambition to achieve high-income status by 2045, requiring deeper integration into global supply chains and faster productivity gains [3]. The OECD has highlighted the importance of strengthening links between multinational enterprises and local firms to sustain this growth trajectory [5].

Vietnam’s stock market is at a pivotal inflection point. With seven out of nine criteria for emerging market status already met and a Central Counterparty (CCP) mechanism slated for implementation by 2027, the country is well-positioned to attract sustained global capital [4]. For investors, the combination of structural reforms, favorable valuations, and a supportive policy environment makes Vietnam a high-conviction opportunity. As the market navigates short-term trade uncertainties, its long-term fundamentals—anchored by productivity growth and institutional trust—offer a compelling case for strategic entry.

Source:
[1] Vietnam ETF Investment Guide [https://aquis-capital.com/news/vietnam-etf-opportunities-and-risks-in-emerging-market-investing]
[2] Việt Nam's FDI grows 27.3% in seven months, signals investor confidence [https://vietnamnews.vn/economy/1722770/viet-nam-s-fdi-grows-27-3-in-seven-months-signals-investor-confidence.html]
[3] Vietnam's Economy in H1 2025: Inflation, Trade, FDI, and ... [https://www.vietnam-briefing.com/news/vietnams-economic-performance-in-h1-2025-inflation-trade-fdi.html/]
[4] Vietnam unveils stock market reform plan to achieve Emerging Market status [https://www.nationthailand.com/business/trading-investment/40052715]
[5] Vietnam attracts higher-quality FDI with rising US European capital flows [https://en.vietnamplus.vn/vietnam-attracts-higher-quality-fdi-with-rising-us-european-capital-flows-post325307.vnp]