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 March, Vietnam’s stock market declined as global energy prices increased following geopolitical tensions in the Middle East, creating short-term pressure across emerging markets. While higher oil prices raised concerns around inflation and interest rates, we see early signs that investor confidence is stabilizing – supported by the market’s recovery toward month-end, steady business outlooks from listed companies, and expectations of potential de-escalation in the region. During the month, short-term price movements allowed us to increase positions at attractive valuations in a few companies where fundamentals and earnings visibility remain unchanged.
The Vietnamese stock market declined in March, with the VN Index falling 10.9% in local currency. The drop was broad across sectors, suggesting a market-wide reaction to macro headlines rather than company-specific developments, and was mainly linked to rising oil prices and concerns about how this could affect inflation and interest rates in the near term. On the other hand, trading activity picked up after a quieter February, when the market closed for the Lunar New Year holiday.
The first week of March marked the steepest weekly decline since the tariff-driven selloff last year. The market declined over the first three weeks due to geopolitical shocks and rising concerns about higher domestic fuel prices, upward pressure on inflation, and potential depreciation of the Vietnamese dong (VND). However, the market started to stabilize toward the end of the month, as investors anticipated potential de-escalation and negotiations between the U.S. and Iran.
In our view, the month’s decline did not reflect changes in underlying fundamentals, with earnings expectations and company guidance remaining largely unchanged. As companies have begun sharing their 2026 earnings plans ahead of the Annual General Meeting (AGM) season, forecasts remain broadly in line with expectations for the companies we track. With selected high-quality companies performing as expected, we expect the market to recover as global uncertainty eases.
Although the current Middle Eastern conflict remains an immediate concern for investors, as reflected in continued foreign net selling, we noted several positive developments that are likely to reinforce confidence in both the short and long term. The Vietnamese government has rolled out countermeasures aimed at reducing reliance on imported oil – such as Directive 09/CT-TTg on improving energy efficiency, promoting alternative energy sources, and accelerating electric vehicle adoption. The election of key leadership positions in April is also expected to reinforce confidence, as this should support effective implementation of these measures.
In addition, policymakers have shown meaningful progress on the Emerging Market upgrade, with legal frameworks and technical infrastructure being finalized on or ahead of schedule. This helps remove key barriers for foreign investors and increases confidence in Vietnam meeting the September 2026 upgrade timeline, supporting earlier positioning and potential capital inflows.
In March, the Government took a more active approach to managing the impact of rising global energy prices, with a clear focus on maintaining stability while supporting growth. On March 7, Prime Minister Pham Minh Chinh emphasized the need to avoid shortages in fuel, electricity, and energy, while coordinating fiscal and monetary policies to keep inflation under control and support the economy’s growth target of around 10%. At the same time, authorities continued to push for stronger domestic demand, faster public investment, and progress in the energy transition.
In response to rising energy costs, authorities introduced a range of targeted actions. Import tariffs on selected fuel products were temporarily reduced to 0% until the end of April to stabilize supply. Meanwhile, ministries proposed tax and fee reductions for the transport and aviation sectors, where fuel costs have increased significantly. The Government is also working to diversify crude oil supply through closer cooperation with countries such as Thailand, Japan, South Korea, and Algeria, while ensuring stable access to aviation fuel.
Alongside immediate responses to oil-related concerns, more sustainable efforts continue through energy efficiency targets and plans to expand electric public transport. In our view, Vietnam’s strategy, which combines short- and long-term actions with closer coordination between central and local authorities, reflects a clear effort to manage risks in a timely manner while maintaining steady economic growth.
Recent data indicates that the economy remains stable. Manufacturing continues to expand, with industrial production up 10% year-over-year, the purchasing managers' index (PMI) at 54.3, and exports growing 18.3%. Public finances are also improving, with state budget revenue increasing 13.1% and public investment disbursement reaching 5.6% of the annual plan.
At the sector level, rising oil prices had a mixed impact across the market. Energy-related companies benefited from higher price expectations, while sectors more sensitive to input costs, including consumer and transportation, faced short-term pressure as higher costs weighed on margins before pricing could be fully adjusted. However, we view these effects as cost-driven and temporary, and have not observed material changes in underlying demand trends.
In the consumer space, early indications from companies’ 2026 outlooks point to continued recovery in domestic demand, supported by stable employment conditions and improving income levels. Leading consumer companies have set strong growth targets, including our portfolio companies Masan Group (MSN), FPT Retail (FRT), and Mobile World Corporation (MWG). While higher fuel costs may affect purchasing power in the short term, established brands have pricing power and can pass on part of the cost increases. This supports sustained consumption, particularly in organized retail and branded products.
In real estate, sentiment remained cautious due to interest rate concerns, but we continue to see stable demand in segments targeting end-users. The government has piloted an Affordable Commercial Housing program targeting middle-income households, allowing direct developer appointment with profit margins capped at 15% and pricing linked to audited project costs, aiming to expand mid-segment supply and ease housing affordability pressures. In addition, the application of property electronic IDs, effective March 1, should help improve market transparency in the long run. We expect developers focused on affordable housing, such as our holding Nam Long Group (NLG), to benefit from these changes.
As we enter AGM season, we are reviewing companies’ 2026 earnings targets across our coverage. So far, the numbers remain broadly in line with our expectations, despite recent global developments. While market conditions may remain uneven in the near term, we remain invested in high-quality companies that can deliver consistent performance over time.
During March, we increased exposure in selected companies where share prices declined significantly but fundamentals remained unchanged, particularly in the modern retail and consumer technology sectors. This allowed us to strengthen the portfolio, focusing on stocks that we expect to recover as market conditions stabilize.
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 for more timely, factual, and actionable updates. If you would like a closer look at investment opportunities in Vietnam, we invite you to connect with us for more information and tailored advice.