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.
May was a quiet month for the Vietnamese stock market, with most of the index's movement driven by a few large-cap names, including two Vingroup-related stocks and selected banks. Capital flows were largely driven by investor sentiment rather than underlying fundamentals such as stable earnings growth and improving business outlooks. Underneath the surface, several developments are underway to further formalize Vietnam's economy and markets: tightening regulatory enforcement against counterfeit goods, raising e-commerce fees to support fairer competition, and improving housing policy to bring affordability closer to genuine demand. Over time, these structural changes provide a healthier operating environment for listed companies, supporting valuations and broad-based growth.
The VN Index was broadly flat in May with a modest gain of 0.6% in USD. The pattern from April repeated itself: performance was concentrated in Vingroup (VIC), Vinhomes (VHM), and a handful of banks, with most of the market staying quiet. During the month, Vingroup – Vietnam’s largest private conglomerate – saw two main developments in its electric vehicle (EV) and real estate businesses, which drew investor attention but did not improve the company's fundamentals. The EV arm, VinFast, announced plans to separate its manufacturing assets and related real estate into a standalone entity valued at around USD 530 million – we view this essentially as a reshuffling of assets, as most of the proceeds will likely be directed toward debt repayment, leaving the listed entity with a lighter balance sheet on paper. Meanwhile, Vinhomes introduced a program allowing property buyers to use accumulated gold as part of payments, an unconventional move that appears designed to broaden the buyer pool for its large-scale project pipeline at a time when conventional credit conditions remain tight. In our view, both developments reflect Vingroup's ongoing efforts to fund its operations rather than evidence of improving underlying business performance. Concentrated investor interest in these few names has created an uneven market in May, and disconnected index movement from the broader earnings picture.
We see healthy earnings results across the broader market as a more meaningful signal, even if they are not yet showing up in short-term price moves. If we exclude Vingroup-related stocks, the market delivered aggregate revenue growth of nearly 20% and net profit growth of more than 30% in Q1/2026. Retail and consumer names were among the strongest contributors, with sector profit up 30–70% year-over-year, supported by market share gains from informal trade as tax enforcement tightens. The VN Index, excluding Vingroup, trades at close to 10 times earnings, near the lower end of its historical range. At this valuation level, there is a disconnection between earnings results and current share prices, reflecting short-term investor caution rather than a deterioration in fundamentals. We expect that gap to narrow as sentiment stabilizes and participation broadens beyond a narrow group of names.
Progress on Vietnam's FTSE Russell Emerging Market upgrade, on track for September 2026, supports this outlook. The government held a working session with major state-owned enterprises (SOEs) this month, with the Ministry of Finance given a deadline to finalize its action plan for SOE restructuring and equity dilution. Broadening free-float among state-linked companies should improve liquidity and foreign investor access across the market, and the regulatory momentum behind this reform has been building steadily.
Inflation has become the central near-term challenge, driven in part by the ongoing conflict in the Middle East. Global oil prices averaging above USD 110 per barrel have pushed input and transport costs higher across the economy, feeding through to consumer prices. Headline CPI growth reached 5.5% year-over-year (YoY) in April, up from 4.7% in March. Because inflation is already running close to the upper boundary of the government's target range, the State Bank of Vietnam (SBV) has limited room to cut interest rates without risking further price pressure. With monetary policy on hold, public investment has become the primary growth lever, with USD 7.8 billion disbursed in the first five months of 2026, up 11.8% YoY and completing 18.4% of the annual plan. Credit growth is also being directed at manufacturing and productive sectors to support output and employment. Meanwhile, Vietnam's sovereign credit outlook was upgraded from “stable” to “positive” in May by Moody’s, affirming its Ba2 rating (Moody’s, May 2026). This re-rating reflects improving institutional reforms, resilient economic growth, and sustained foreign direct investment (FDI) inflows.
The Vietnamese dong (VND) has remained relatively stable, with market depreciation expectations sitting in the 1–3% range for the year, consistent with the SBV's managed exchange rate policy. Vietnam has run a trade deficit of USD 13.8 billion in the first five months of 2026, but the dong's stability reflects the SBV's active use of FX swaps and open market operations to manage liquidity, alongside sustained FDI inflows that provide an offsetting source of foreign currency. Continued foreign selling in the stock market with year-to-date net outflows of USD 2.5 billion reflected higher US interest rates and a stronger dollar drawing capital back toward developed markets – a trend affecting most emerging markets, with ongoing tensions in the Middle East adding to investor caution. Supporting economic growth while keeping the dong stable and inflation contained remains the central challenge for monetary policy in the months ahead.
Tourism growth remains strong, as Vietnam welcomed a record 10.6 million international visitors in the first five months of 2026, up 14.9% year-over-year, according to the National Statistics Office. This has contributed to retail sales increasing 11.2% YoY despite inflation concerns. The country remains on track toward its annual target of 25 million visitors. Long Thanh International Airport, currently under construction in Dong Nai province and expected to become Vietnam's largest airport by capacity upon completion, is expected to significantly expand the country's ability to handle international arrivals over the medium term.
As part of continued market formalization, the government launched a nationwide crackdown on counterfeit goods and intellectual property violations from May 7 to 30, directing agencies to handle at least 20% more cases than in the same period last year. Customs authorities were given new authority to suspend clearance for suspected violations. According to the Ministry of Industry and Trade, inspectors uncovered more than 23,000 violations in 2025 alone, covering goods of unclear origin, counterfeit products, price manipulation, and food safety breaches. Stricter enforcement raises the compliance bar for informal and grey-market operators, shifting demand toward established brands with verifiable sourcing, documented supply chains, and proper licensing. This is directly relevant to compliant pharmacy chains such as Long Chau, operated by FPT Retail (FRT), and traditional medicine producer Traphaco (TRA). Both of these businesses, part of our portfolio, stand to gain market share as smaller, less-compliant operators face higher compliance costs or exit the market.
The retail market saw meaningful signals for fairer competition as e-commerce platform fees continued to rise. In May, Shopee implemented a 1% increase in transaction fees, while TikTok Shop raised commissions by 0.5–2.2% across product categories. Together, the two platforms account for over 90% of Vietnam's e-commerce gross merchandise value (GMV) and have both been asked by regulators to provide information as part of a broader review of fee practices. In their early growth phase, e-commerce platforms in Vietnam kept seller fees low and heavily subsidized promotions and logistics costs to attract both merchants and shoppers. This subsidy-driven growth model is shifting, and as operating costs on these channels rise, retailers with stronger brands and more disciplined cost structures, such as our holding Mobile World Corporation (MWG), are better placed to manage the transition and expand market share.
In real estate, the Prime Minister has asked regulators and banks to develop a more detailed lending classification framework, separating commercial housing, social housing, and industrial parks rather than applying broad credit tightening across the sector. The intent is to keep financing available for segments where genuine demand and affordability are the primary drivers, bringing housing access closer to real income levels. This is relevant to mid-end developers like our portfolio company Nam Long Group (NLG), whose focus on affordable and social housing product segments positions it well to benefit from a credit framework that distinguishes genuine end-user demand from speculative activity.
In May, Giang Nguyen, Head of Investment at Kenno and newly appointed Chairwoman of TNH Hospital Group (TNH), chaired the company's 2026 annual general meeting (AGM). The AGM set out a clear operational direction for the next three years, with management targeting significantly higher revenue and profit growth in 2026 as TNH brings a new general hospital and a new maternity and pediatric center into operation. With five hospitals either running or ramping up across northern and central Vietnam, the group's focus has shifted from expansion to improving performance at existing facilities: building out higher-value services such as advanced diagnostics, surgical procedures, and specialized inpatient care, upgrading patient facilities, and aligning staff incentives with operating outcomes. We see 2026 as a transition year at TNH, with the stronger underlying performance expected to come through from 2027 as new facilities build patient volumes and the operational changes take hold.
IPO activity in Vietnam showed early signs of revival in May, after several years with very few significant new listings. Among the names moving forward, Dien May Xanh (DMX), the phones and electronics retail subsidiary of our portfolio company Mobile World Corporation (MWG), received official approval for an IPO in 2026, targeting a raise of approximately USD 550 million by issuing a 16.3% stake. If fully subscribed, this would be the largest IPO in Vietnam in the past seven years by deal size. The listing should help surface more of the value within the MWG group and may support reinvestment into Bach Hoa Xanh (BHX), MWG's fast-growing grocery retail business. CP Vietnam, the local subsidiary of Thailand's largest private conglomerate and one of Vietnam's leading integrated agro-food businesses, is also preparing for a listing. The return of meaningful IPO activity is a broadly positive sign for Vietnam's capital markets and points to gradual improvement in the regulatory environment for new listings.
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.