As Vietnam continues to thrive 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.
With its stock market set for an upcoming upgrade to Emerging Market status, Vietnam continued to push for sector reforms, record positive corporate earnings, and sustain strong economic momentum in October. Several billion dollars expected from new foreign capital inflows triggered by the market upgrade, coupled with Vietnam’s resilient macroeconomic backdrop, are expected to bring long-term benefits to fundamentally strong companies that have been actively positioning themselves to capture this next wave of growth.
Stock Market Movement
On October 8, FTSE Russell announced that Vietnam will be upgraded to Secondary Emerging Market status in September 2026, reflecting the country’s multi-year effort to modernize its capital market with significant reforms and improvements. The effective reclassification will mark global recognition of Vietnam’s progress in building a more efficient, transparent, and accessible market for foreign investors.
The market first reacted quickly and positively to the upgrade news, then softened toward month-end in a global decline due to U.S.–China trade tensions over rare earths. As more investors took profit after a six-month rally in financial stocks, heavy selling across the banking and brokerage sectors also contributed to the VN-Index’s slower performance in October. Amid this volatility, trading activity and value remained robust, keeping Vietnam among the most liquid stock markets in Southeast Asia.
A positive sign we observed against the continued outflows of foreign capital was selective buying in some large-cap stocks such as FPT Corporation (FPT) and Vingroup (VIC). This suggests renewed interest in companies with strong earnings visibility and available foreign room, a trend expected to amplify as the market upgrade becomes effective.
Macroeconomic Developments
Vietnam’s economy demonstrated resilience in the third quarter of 2025 with 8.2% GDP growth year-over-year despite challenges – including supply chains being significantly disrupted by eight tropical storms so far this year, and the impact of U.S. tariffs of 20% on Vietnamese goods announced in August.
Foreign investment became a highlight in October following Apple's announcement to shift production of its next-generation smart home devices to Vietnam. Expansion from Apple and its partner network, including major suppliers such as BYD, Foxconn, Goertek, and Luxshare-ICT, supports local job creation, capital inflows, and higher-value manufacturing capacity in the coming years.
Looking ahead, Vietnam has set growth targets of 10% for both annual GDP growth and average income (to USD 5,500 per capita). To push for further reforms that facilitate achieving these goals, the government recently confirmed plans to remove longstanding bottlenecks across various fronts: land regulation, investment approvals, construction, environmental permitting, and energy development. At Kenno, we remain confident in this economic setup for Vietnam and our portfolio companies, as we continue to see broad-based improvement across consumption, employment, and investment indicators.
Sector Highlights
In October, the property sector was in focus as the Ministry of Construction advanced several major initiatives to improve transparency and housing affordability. These include piloting Real Estate Trading Centers, developing a National Housing Information System, updating regulations for social housing, and drafting guidelines for a National Housing Fund. Discussions in the National Assembly are also exploring more flexible mechanisms for land allocation, land-price updates, and streamlined approval for land-use rights.
We highlight this development because, in recent years, asset prices in Vietnam have risen faster than the average household income due to speculation, creating affordability challenges for homebuyers and leading to inefficiencies for developers. These regulatory measures aim to stabilize the market into a more consumer-focused state where housing prices better reflect purchasing power. If progress continues, well-established real estate developers such as our portfolio companies Nam Long Group (NLG) and Vincom Retail (VRE) stand to benefit from improved land access and faster project execution.
The Month at Kenno
Throughout October, we actively rebalanced our portfolio toward holdings in information technology, real estate, and consumer goods. This decision followed new supportive policies for these sectors and a clear redirection of capital flows toward them, creating opportunities for us to reallocate to companies that we believe will benefit the most over the next 12 to 24 months.
These adjustments reflect our principle at Kenno of always remaining focused on the profitability and governance of the companies that we invest in, as we believe they are the fundamental drivers of the fund’s performance. That said, we acknowledge the importance of the Emerging Market upgrade, as it creates new opportunities for listed firms in Vietnam to capture the next wave of foreign capital. With improving economic fundamentals and greater market accessibility, we believe this is an attractive entry point for investors seeking diversified exposure to Asia.
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.
