As Vietnam continues to rank among Asia’s top destinations for foreign investment, we are committed to keeping our global audience informed about key developments through the Kenno Vietnam Pulse series.
In December, Vietnam advanced stock market access through a proposed global brokerage system, established an International Financial Centre in Ho Chi Minh City and Da Nang, and introduced tax changes that should support household spending into 2026. While the VN Index experienced sharp swings during the month, macro pressures eased toward month-end, helping investor sentiment stabilize ahead of the earnings season. At Kenno, we further strengthened our portfolio and headed into the new year with confidence.
Stock Market Movement
The Vietnamese stock market was volatile in December, driven largely by macro developments and news related to Vingroup, which accounts for roughly a quarter of total market capitalization. The VN Index pulled back several times due to concerns about rising interbank and deposit rates, potential policy changes, as well as Vingroup’s withdrawal of its investment proposal for the USD 67 billion national high-speed railway project. The market rebounded in the second half of the month as macro pressures began to ease, particularly with positive signals in interbank liquidity and the foreign exchange market. The index ended the month with a 5.5% gain in local currency, bringing annual growth to 40.9% – or 12.9% when excluding Vingroup-related stocks.
The month posted net foreign inflows of USD 66 million. While still modest, this marked a return to net buying by foreign investors after four consecutive months of selling. In line with Vietnam’s market upgrade roadmap, foreign investor access was further advanced by the State Securities Commission (SSC) through the introduction of the Global Broker model. Under this framework, foreign investors would be able to trade via custody accounts without opening local trading accounts, subject to the future implementation of a central counterparty (CCP). The draft circular also clarifies responsibilities between global and local brokers across order execution, KYC, data provision, and non-prefunding settlement support. Resulting foreign inflows are likely to favor liquid large-cap stocks, which account for approximately 75% of Kenno’s portfolio.
Macroeconomic Developments
December’s macro highlight for Vietnam was the formal establishment of an International Financial Center (IFC) under a “one center, two locations” model, positioning Ho Chi Minh City as the core financial hub and Da Nang as the innovation and sustainability center. The IFC is designed to upgrade the country’s investment landscape through various functions, such as fast-tracking market entry for investments, facilitating foreign exchange arrangements, regulating tax incentives, and expanded licensing powers for financial institutions. It also introduces favorable corporate and personal income tax policies, aimed at attracting both capital and talent. For instance, enterprises undertaking new investment projects in priority sectors within an IFC may benefit from a 10% corporate income tax rate for up to 30 years, including up to four years of exemption and a 50% reduction for up to nine subsequent years.
Our view is that, beyond headline incentives, the IFC can become a meaningful catalyst for Vietnam’s economy and capital markets over the long term. Currently, many investment projects across sectors in Vietnam continue to face challenges, including administrative hurdles (permits, land clearance), resource constraints (infrastructure, skilled labor), and policy uncertainty (taxation, ownership limits). By addressing these issues, the IFC initiative should help attract more institutional capital, support higher-quality investment projects nationwide, and contribute to broader economic growth.
Sector Highlights
Vietnam recently implemented tax reforms which we expect to lift disposable income and household spending in 2026, with the strongest impact on our portfolio companies in consumer retail and healthcare. Under the draft policies, the tax-exempt revenue threshold for household businesses increases from VND 200 million to VND 500 million, which would remove nearly 90% of household businesses from tax obligations. In addition, updated regulations effective January 1, 2026 raise personal income tax (PIT) thresholds, with the personal tax-exempt level increasing to VND 15.5 million per month (from VND 11 million) and the deduction for each dependent rising to VND 6.2 million per month (from VND 4.4 million). The progressive tax schedule is also redesigned from seven brackets to five, with most brackets having a higher taxable threshold. In our view, these changes will especially benefit the Vietnamese middle class – the primary driver of domestic consumption.
Meanwhile, to improve transparency in the property market, the Prime Minister has called for a central public database on real estate and housing data by Q1/2026 – covering land prices, project planning, legal status, transaction data, and development costs. This should help bring currently inflated housing prices back to more affordable levels and improve market liquidity. It is also in line with the Government’s plan to develop one million social housing units by 2028. We believe that property developers focused on the affordable segment, including our portfolio company Nam Long Group (NLG), are especially well positioned to benefit along this trajectory.
The Month at Kenno
On December 1, our team met in person with the new CEO of pharmaceutical firm Traphaco (TRA). In addition to discussing the company’s 2025 performance and outlook for 2026, we provided shareholder feedback focused on improving investor relations and strengthening profit margins.
At Thai Nguyen International Hospital (TNH), our Head of Investments, Giang Nguyen, participated in board-level performance reviews of its three hospitals and took part in making decisions related to TNH’s operations and governance for 2026.
We enter the new year with confidence that growth in Vietnam’s consumer market will translate into revenue gains and shareholder returns in 2026. At the same time, we remain mindful that macro factors and new capital flows only tend to benefit companies with solid market positioning, resilient balance sheets, and clear earnings visibility. This supports our continued focus on liquid, large-cap holdings such as FPT, MWG, and MSN, in the portfolio.
Stay in the know!
And that’s a wrap for this month’s edition of Kenno Vietnam Pulse. We hope you enjoyed reading and found valuable insights into Vietnam’s market landscape. Feel free to subscribe to our monthly newsletter more timely, factual, and actionable updates. If you would like closer look at investment opportunities in Vietnam, we invite you connect with us for more information and tailored advice.
