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.
September was an important month for Vietnam as the country held the biggest celebration of its Independence Day to date, which also marked the simultaneous launch of 250 infrastructure projects nationwide. Coupled with anticipation of the FTSE market upgrade and positive second-quarter earnings, we observed increased investor confidence, which continued to be reflected through the rally in financial and property sectors. However, as these catalysts became priced in toward month-end, the VN-Index reverted slightly into a market-wide decline.
On October 8, index provider FTSE Russell officially reclassified Vietnam from Frontier to Secondary Emerging Market status, effective September 21, 2026, following an interim review in March. This marks the country's first-ever upgrade by a major index provider — an important milestone for its stock market to be more accessible globally and recognized more widely as an international market.
Before the news, in September, the stock market slowed as retail investors adopted a more cautious approach and held on to their cash in anticipation of the market upgrade result as well as more clarity into Q3 earnings results. After a strong summer of activity in financials, we saw a rotation of capital flows into materials, construction, energy, and industrial parks.
A key development that we'd like to highlight from September was the Stock Market Upgrade Scheme — a roadmap designed by the Vietnamese government to secure FTSE Secondary Emerging status by 2025 as well as target MSCI Emerging by 2030. The Stock Market Upgrade Scheme focuses on aligning Vietnam's stock market with global standards: resolving pre-funding requirements, simplifying foreign account opening, improving transparency on foreign ownership, strengthening technical infrastructure, and adopting international frameworks such as International Financial Reporting Standards (IFRS) and corporate governance principles set by the Organization for Economic Cooperation and Development (OECD).
As part of this plan, Decree 245/2025, including multiple regulatory improvements, was issued last month to provide foreign investors with better access to more listed companies' stocks. Given continued reforms and the fact that the first milestone of the plan — the FTSE market reclassification — has just been achieved in early October, we remain positive that, in the medium term, Vietnam's USD 350 billion stock market will attract several billion USD from new investors overseas.
Vietnam’s economy continued to perform well in the third quarter, largely driven by tourism and exports, despite global headwinds. GDP expanded 8.2% year-over-year (YoY), the fastest third-quarter growth since 2011, excluding post-COVID effects, bringing year-to-date (YTD) growth to 7.9%. International tourist arrivals to Vietnam increased by 18% YoY in the first eight months of 2025 (8M/2025), among the highest worldwide and on par with Japan. The country's exports to the U.S. remain robust, with August shipments rising 18% YoY and cumulative 8M/2025 exports up 26.5% YoY — though we expect this to moderate toward year-end as it has almost passed the peak season for U.S. holiday shipping.
In last month's update, we mentioned Vietnam's record credit growth with a full-year projection of 20% YoY, the fastest pace in years. While this has played a major role in maintaining a supportive policy stance to sustain economic recovery, it has become increasingly important for the State Bank of Vietnam (SBV) to approach inflation with more vigilance. This cautionary stance seeks to mitigate two key risks: tighter funding conditions as banks lift deposit rates, and medium- to long-term inflationary pressure from faster money supply growth — while keeping strong economic growth in check.
We believe another reason for rising caution from policymakers is concerns over the Vietnamese dong (VND) depreciation (-3.5% YTD against the USD). To address this while strengthening FX management and repatriating capital flows, on September 9, Vietnam launched a landmark five-year pilot program for a sovereign digital asset market, establishing a cautious, transparent, and tightly controlled framework for issuance, trading, and related services.
According to the new regulation, Vietnamese investors may hold digital assets but must execute all transactions exclusively through licensed providers following a six-month grace period. Currently, virtually all crypto trading activity from Vietnam takes place on global exchanges. The country ranks fifth globally in cryptocurrency adoption, with around 17 million investor accounts (equivalent to 17% of the population) and USD 105 billion in transaction value. Therefore, once a domestic crypto market is successfully implemented, we expect that demand for the VND will increase, which will strengthen the currency.
In September, the healthcare sector gained our attention following the Politburo's Resolution 72 on Vietnam’s healthcare system, which sets out a long-term plan to strengthen national healthcare and improve access across regions. The policy includes free annual health screenings for all citizens starting in 2026, exemptions for basic hospital fees within the health-insurance system by 2030, and a life expectancy target of 75.5 years by 2030 and above 80 years by 2045. By directing investment and staffing resources to provincial hospitals, the government aims to relieve pressure on large urban centers and create more balanced access nationwide.
While this direction can drive up competition in primary care in provinces as public hospitals and medical facilities receive more state resources and funding, we think the private sector, including our portfolio company Thai Nguyen Hospital (TNH), stands to benefit significantly from rising demand for high-quality medical services. Overall, the new resolution reinforces our positive outlook on a larger and more efficient healthcare ecosystem across Vietnam — a cornerstone for the country to improve its living standards and achieve sustainable economic growth.
Against the macro backdrop in September, we stayed the course toward our long-term objectives by further strengthening our investment portfolio in liquid, large-cap holdings, as well as by actively engaging with the companies we invest in.
Over the month, our Investments team began implementing the ASEAN Corporate Governance Scorecard across our portfolio to identify areas for improvement and define governance priorities for 2026. We started applying the framework to one of our top holdings, Masan Group (MSN), to benchmark performance against regional peers and align practices with international investors’ expectations.
At the same time, we helped Thai Nguyen Hospital (TNH) make clear progress in how it is managed and overseen. Since joining the board, our Head of Investments, Giang Nguyen, has chaired the Audit Committee and led changes to strengthen internal controls. A new policy has been introduced to bring more transparency to related-party transactions, setting clearer approval rules and stronger accountability. These steps build trust and support the company’s path toward better-quality earnings.
Looking back at the market, as Vietnam moves toward its effective market upgrade in September 2026, we believe the opportunity for long-term investors is both clear and timely. The recent rotation away from financials has left many consumer-focused leaders trading at attractive valuations, even as structural demand continues to grow and, by our estimates, will gradually materialize over the next year. Our active management approach positions us to capture this next wave of value creation — making now a compelling entry point for investors who share our conviction in Vietnam’s transformation.
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.