Assessing the Risks and Opportunities in Vietnam's Fervent IPO Market Amid Market Volatility

Vietnam's capital market in 2025 has become a focal point of Southeast Asia's financial landscape, driven by a surge in large-scale IPOs and aggressive capital-raising by securities firms. The market's forward price-to-earnings (P/E) ratio of 11.5x and price-to-book (P/B) ratio of 1.6x suggest an attractive valuation environment, bolstered by the anticipated FTSE Russell upgrade to Secondary Emerging Market status in September 2026. However, this optimism is tempered by market volatility, foreign investor caution, and governance challenges. For securities firms, the urgency to raise capital amid these dynamics reflects both strategic ambition and existential necessity.

Valuation Pressures: A Double-Edged Sword

The Vietnamese IPO market has shifted toward fewer but larger deals, with financial sector firms dominating the spotlight. Techcom Securities JSC and VPBank Securities, for instance, raised a combined $1 billion in 2025, signaling a shift toward quality over quantity. Yet, valuation metrics for these firms remain opaque. Techcom Securities' trailing twelve-month (TTM) P/E ratio could not be calculated due to insufficient earnings data, while its price-to-book ratio for a related entity, TechCom (OTCPK:TCRI), stands at a negative 37.2x according to Simply Wall Street. Such anomalies highlight the risks of overvaluation in a market where optimism may outpace fundamentals.

Market volatility has further complicated pricing strategies. In Q3 2025, the VN-Index fell 1.2% monthly, and foreign investors recorded net outflows of $1 billion, particularly in financials and real estate. While domestic retail participation has surged-driven by margin loan balances reaching $7.8 billion by Q3's end-this liquidity may not sustain valuations if macroeconomic headwinds persist.

Capital-Raising Urgency: Aligning with Global Standards

Vietnam's securities firms are racing to expand their capital bases to meet the demands of an evolving market. LPBank Securities JSC plans to increase its capital from $155.5 million to $506.7 million through a shareholder offering, while Tien Phong Securities JSC (TPS) aims to nearly double its capital to $249.6 million. These efforts are not isolated; SSI Securities and VPS Securities are also pursuing significant share issuances to bolster their balance sheets.

The urgency stems from the impending FTSE Russell upgrade, which is expected to unlock foreign capital inflows. Regulatory reforms, such as the removal of foreign ownership caps and the introduction of a Central Counterparty Clearing mechanism by 2027, are designed to attract institutional investors. However, progress is uneven. Despite these reforms, foreign investors remain net sellers in 2025, citing concerns over exchange rate volatility and governance disclosure.

Navigating Volatility: Strategic Adaptation

Market volatility has forced securities firms to adopt flexible pricing strategies. The government's reduction of IPO timelines from 90 to 30 days aims to accelerate listings, but firms must balance speed with prudence. For example, VPBank Securities launched its IPO at VND33,900 per share, a price reflecting both market optimism and the need to ensure investor confidence.

Domestic investors, however, have remained resilient. With over 10 million trading accounts, retail participation has become a cornerstone of liquidity. This contrasts with foreign investors, who have engaged in profit-taking and macro hedging, as noted by cumulative net outflows exceeding $4 billion by late October 2025. The divergence in investor behavior underscores the market's duality: a domestic-driven rally coexisting with foreign caution.

Risks and Opportunities in 2026

The path forward hinges on three critical factors: foreign exchange stability, governance transparency, and the pace of market-plumbing reforms. While Vietnam's $5 billion Equity Market Development Programme and digitalization efforts are promising, delays in implementing these reforms could deter long-term capital. Additionally, the absence of IPOs in H1 2025, despite robust secondary trading, suggests that companies are prioritizing alternative capital-raising mechanisms over traditional listings.

For securities firms, the stakes are high. Those with larger capital bases are poised to gain a competitive edge, as higher equity allows for expanded margin capacity and diversified product offerings. However, firms that fail to align with international standards risk being left behind in a market increasingly shaped by global benchmarks.

Conclusion

Vietnam's IPO market in 2025 exemplifies the tension between ambition and uncertainty. While valuation pressures and capital-raising urgency reflect a market in transition, the success of this transformation will depend on the government's ability to address volatility, enhance transparency, and deliver on its reform agenda. For investors, the key lies in distinguishing between firms that are merely riding the wave and those that are building sustainable foundations for the future.