Unleashing Prosperity: Vietnam’s Stock Market Soars in 2025-Discover Why This Is Just the Start!

Move over, China; Vietnam is stepping into the spotlight as a burgeoning market in Asia. Fueled by stock market gains, domestic reforms, and favorable trade conditions, Vietnam has captured significant attention in 2025. Notably, the VanEck Vietnam ETF (VNM) has surged about 62%, far surpassing the iShares MSCI China ETF (MCHI), which has climbed nearly 31%. Furthermore, Vietnamese equities have outperformed other emerging markets, with VNM’s year-to-date performance more than double the approximately 30% increase of the iShares MSCI Emerging Markets ETF (EEM). The VN Index, Vietnam’s domestic benchmark, has rallied an impressive 38% this year.

“The momentum in Vietnam is undeniable,” said Thea Jamison, managing director at Change Global, in a CNBC interview. “There’s so much potential in emerging markets beyond China,” she asserted, labeling Vietnam as a “shining, up-and-coming superstar.” After suffering significant losses in 2022, Vietnam’s stock market has rebounded vigorously, trading well above pre-pandemic levels. Driven largely by domestic retail investors, the market-described as “still super, super cheap” compared to the U.S.—has seen liquidity rise, reaching an average daily trading value of $2 billion at times this year, according to Jamison. “Foreigners have largely missed out on this rally,” she noted, emphasizing the market’s growing independence from volatile foreign flows.

This upbeat sentiment was bolstered when FTSE Russell announced it would elevate Vietnam to secondary emerging market status, effective September 21, 2026. This upgrade reflects several reforms in the Southeast Asian nation, including the removal of prefunding requirements for foreign investors. Thu Nguyen, managing director and head of investments at VinaCapital, projected that this could attract an additional $5 billion to $6 billion in capital. “We are optimistic that the Vietnamese authorities will effectively navigate remaining issues to ensure that the upgrade happens as planned,” she said, underscoring the importance of implementing comprehensive reforms to deepen the capital markets.

While Vietnam’s stock market performance this year establishes it as a top contender, its gains have been somewhat concentrated, primarily in the real estate sector. Excluding significant players like Vingroup and Vincom Retail, the VN Index’s year-to-date increase would shrink to about 10%. Nguyen anticipates that 2026 will provide a “more stable” market environment, predicting corporate earnings growth around 15% and stock market returns between 15% and 20%. “The market valuation remains reasonable, indicating potential upside from earnings growth,” she added.

Simultaneously, Vietnam’s broader economy is on the upswing, driven by structural reforms aimed at creating a more business-friendly environment. Resolution 68, enacted by the ruling Communist Party in May, seeks to bolster the private sector by easing bureaucratic barriers and enhancing access to capital. Additionally, amendments to the Land Law aim to streamline land acquisition processes for investors, based on new regulations effective in 2024.

Vietnam’s ambitious economic trajectory traces back to earlier reforms, particularly the landmark “doi moi” policies of 1986. Dan Kritenbrink, a partner at The Asia Group, highlighted that Vietnam’s economic transformation began years before the current reforms, particularly after the U.S. trade embargo was lifted in 1994. “Vietnam’s economic development over the last few decades has been remarkable, positioning it at a new phase of growth,” he stated.

Foreign direct investment has surged, reaching $21.3 billion in disbursed funds over the first ten months of the year-the highest for this period in five years. “The cranes are working,” noted Jamison, as investors recognize Vietnam’s potential. Key elements driving this growth include a young, dynamic workforce and government investments in education and vocational training aimed at bolstering labor market development.

Amid rising geopolitical tensions, especially in U.S.-China relations, Vietnam is actively pursuing diverse trade agreements to mitigate reliance on any single market, with the U.S. as its largest trading partner. An agreement reached in July garnered interest, reducing tariffs on Vietnamese imports. “Vietnam’s competitive edge continues to expand,” Jamison said. However, external factors, including ongoing geopolitical tensions and potential foreign monetary outflows, may still temper investor enthusiasm.

Although gaining direct exposure to the Vietnamese market can be challenging for U.S. investors, the VNM ETF offers a viable option, charging 0.68% in fees and managing over $580 million in assets, reflecting growing interest in this emerging powerhouse.

Original Source: https://www.cnbc.com/2025/12/09/vietnam-stock-market-is-booming-in-2025-why-this-may-just-be-the-beginning.html
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Publish Date: 2025-12-09 22:52:00