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 June, Vietnam's stock market extended a trend that has held for the past three months: the VN Index ended virtually unchanged, with gains concentrated in a handful of Vingroup-linked companies and banks. The main issue is a liquidity squeeze that has been building over time. Credit has continued to grow faster than deposits, while pressure on the Vietnamese dong (VND) limits how much support the State Bank can provide across the whole economy. As a result, available capital is still reaching businesses linked to state-backed projects first, rather than spreading evenly across the wider market. This month, we cover developments expected to help move capital more evenly through the economy, such as a push on state-enterprise divestment and a new resolution on foreign investment. Over time, these changes are intended to support a more efficient market where share prices reflect company fundamentals rather than proximity to state-backed financing.
Stock Market Movement
Vietnam's renewed push on state-owned-enterprise (SOE) divestment is expected to direct more capital into public markets by targeting a long-standing problem: many large state-linked companies have already equitized (converted from wholly state-owned into joint-stock companies), but shares remain concentrated in state or major-shareholder hands, leaving free float too thin for foreign institutional investors to deploy meaningful capital (Vietnam News). To fix this, the Ministry of Finance introduced new rules to accelerate the sale of state stakes in nearly 40 companies under the State Capital Investment Corporation (SCIC), such as bundling strong and weak assets into single blocks for improved liquidity, and progressively lowering the starting price to more attractive levels. Proceeds return to the state budget, freeing up capital for reinvestment in priority sectors like infrastructure, technology, and healthcare, rather than leaving it tied up in illiquid state assets that have been difficult to sell for years.
Indonesia's recent restructuring offers useful lessons for Vietnam's own equitization and divestment program, as both countries are working through a similar backlog of illiquid state assets. Indonesia's sovereign wealth fund, Danantara, has liquidated more than 160 state firms since last year, targeting a cut from over 1,000 entities to roughly 200–300 by the end of 2026 (Antara News). However, restructuring at this scale only works if acquirers are not forced to absorb a distressed target's liabilities before its financials and governance gaps are cleaned up, noted analyst Herry Gunawan of NEXT Indonesia Center (Indonesia Investments). If Vietnam follows this discipline and manages to optimize its SOE network, it would widen the free float – the portion of shares available for public trading – which is an important factor in the country's case for a stock market upgrade.
The nearer-term picture, though, is still shaped by uneven credit easing, which channels new lending toward a short list of state-approved projects rather than the wider economy. The VN Index traded largely flat in June, with gains again concentrated in the same few Vingroup-linked names: Vingroup (VIC), Vinhomes (VHM), Sacombank (STB), and Techcombank (TCB). Even as global sentiment normalized around the US-Iran ceasefire, Vietnam's domestic conditions were not strong enough to support broad-based market gains. Foreign investors kept selling, with net outflows running through most of 2026, a pattern also seen in Indonesia and the Philippines as higher US rates draw capital toward developed markets. Vietnam's market may need more time, but the structural changes covered below, around the economy and key sectors, are what we expect to widen liquidity in the long term.
Macroeconomic Developments
Vietnam's growth model is increasingly shifting toward public investment, infrastructure development, institutional reform, and a deeper capital market able to channel more investment into the economy. With the Vietnamese dong under pressure and credit already growing faster than deposits, the State Bank has limited room to support lending across the whole economy, and has therefore created targeted room for projects it considers nationally important. It introduced Circular No. 25, effective from July 1, raising the ceiling on medium- and long-term lending funded by short-term deposits from 30% to 40%, restoring it to around the 2020–2021 level. On June 23, it also excluded loans tied to 18 strategic infrastructure projects run by real estate developers Vingroup, Sun Group, and Masterise, worth a combined USD 29 billion, from banks' credit growth limits (Vietnam News). Both measures free up lending capacity specifically for capital-intensive sectors, such as infrastructure and construction, without loosening credit across the entire system. This reflects a targeted approach at a time when liquidity remains tight and credit is not flowing evenly across the economy.
The clearest example of targeted capital allocation came on June 22, when Hanoi broke ground simultaneously on five metro lines and three rental-housing projects, described by city officials as the capital's largest-ever combined infrastructure and housing investment (Vietnam Plus). The five metro lines span around 303 km with a preliminary investment exceeding USD 49 billion, while disbursement and economic impact will build gradually toward 2027–2030. The government has also made room to fund these types of projects. On June 23, it issued Decision No. 1119 on Vietnam's financial strategy, raising the fiscal deficit ceiling from around 3% to 5% of GDP and lifting development investment to about 40% of state budget expenditure. Beyond developments within the capital city, large-scale infrastructure spending is also one of Vietnam's structural growth drivers, since disbursement itself creates demand for materials, labor, and financing well before these projects come into operation.
At the same time, domestic consumption held up despite rising prices. According to the National Statistics Office, retail sales and consumer services revenue rose 11.2% year-over-year in the first five months of 2026, to VND 3,185 trillion (around USD 120 billion). Real growth, excluding the effect of higher prices, was more modest at 6.1%. Tourism-related services – accommodation, food, and travel – grew 12–13% on favorable visa policies and continued tourism promotion. The main external risk in June came from the US, where the Office of the US Trade Representative opened a Section 301 investigation into Vietnam's intellectual property enforcement, alongside a separate investigation into structural manufacturing capacity covering supply chains, rules of origin, and transshipment (USTR). Vietnam's response has been to tighten its own enforcement, accelerating intellectual property protection and raising administrative and criminal penalties, aimed at resolving USTR's concerns before its final determination in late November – heading off export risks while raising compliance standards in the domestic consumer market.
Sector Highlights
On June 8, the Politburo issued Resolution No. 10, directing Vietnam to prioritize innovation-led and greener foreign direct investment (FDI) over simply maximizing inflows. This benefits high-tech sectors such as semiconductors, AI, electronics, and advanced manufacturing. Between 2026 and 2030, Vietnam is seeking USD 200–300 billion of newly registered FDI and USD 150–200 billion disbursed, alongside stronger technology transfer and deeper integration with local suppliers. Combined with continued progress on Vietnam's emerging-market upgrade, this resolution is also expected to bring steadier foreign-currency inflows, easing pressure on the VND and giving the State Bank more room to manage interest rates.
The government paired this with a parallel strategy to build its own technology exporters. Under Decision No. 982, signed on June 4, Vietnam aims to have at least 5,000 digital technology enterprises generating overseas revenue by 2030, targeting USD 55 billion in digital exports growing at least 30% a year, backed by tax incentives, regulatory sandboxes, and support for international M&A and listings. Together, these government directives aim to attract better foreign capital while building the capacity to compete abroad on Vietnam's own terms. Leading technology players, including our portfolio company FPT Corporation (FPT), are among those best positioned to benefit as this strategy takes shape.
The retail sector continues to see rising regulatory and quality standards, with ongoing enforcement against counterfeit products. From July 1, businesses selling high-risk goods must register on a new national traceability platform, VeriGoods, run by the Ministry of Industry and Trade, with full compliance mandatory from January 2027 (VnEconomy). The regulation aims to enhance consumer protection, product transparency, and supply-chain traceability, while encouraging voluntary participation from retailers through certification and promotional incentives. This is a tangible step toward a more formal market, where compliant, well-operated businesses are better placed to win market share as enforcement costs rise for smaller, less-transparent competitors.
The Month at Kenno
Our investment team spent four days at the HSC Emerging Vietnam 2026 conference in Ho Chi Minh City, speaking to policymakers and company management across the market. The clearest message around the industry was that Vietnam's investment story is becoming more selective: after several years defined by broad recovery, company-level execution now matters more for returns. Catalysts such as the Emerging Market upgrade, public investment, and continued reform remain in place, but the strongest opportunities are increasingly concentrated in specific quality names and structural themes, including retail formalization and the growing practical, ethical use of AI in business.
Across our meetings with consumer companies, management teams were candid about where growth is coming from this year – deeper penetration and better execution within existing operations, rather than the aggressive store-opening or territorial expansion that characterized earlier cycles. That distinction, between genuine operating improvement and growth in scale alone, is increasingly what separates the companies we want to own from the ones we don't. Since last year, a similar quality-over-quantity strategy has been effectively adopted by two of our top consumer retail holdings, Masan Group (MSN) and Mobile World Corporation (MWG), reflected in reduced operating costs and consistent same-store revenue growth.
MWG's phones and electronics retail subsidiary, Dien May Xanh (DMX), was also a popular topic on the ground, as its listing ranks among the largest in Vietnam in several years amid an otherwise quiet IPO market. DMX completed its IPO subscription on June 17, with 93% of the offered shares, worth more than USD 500 million, taken up by investors. Strong demand for DMX reinforces our view that, even in periods of subdued activity and continued foreign net selling, capital remains readily available for established, well-run businesses with strong earnings visibility.
Stay in the know!
And that wraps up this month’s edition of Kenno Vietnam Pulse. We hope you found these updates helpful in understanding Vietnam’s market and investment landscape. To receive future editions directly in your mailbox, feel free to subscribe to our monthly newsletter. If you would like a closer look at investment opportunities in Vietnam, we invite you to connect with us.
