We would like to present you our monthly Macroeconomic & Stock Market Highlights for Vietnam alongside with the monthly performance update of the TIM Vietnam Actively Managed Certificate for February 2025.

Vietnam’s Update – Economy

Please recall that Vietnam had a long public holiday for Lunar New Year in January 2025. Hence, the combined Jan-Feb numbers will be used for year-over-year comparison.

With inflation remaining under control, retail sales maintained steady momentum. The CPI rose 2.9% y/y, primarily driven by a 3.1% increase in food prices and a 14.5% rise in healthcare costs following government price adjustments and seasonal flu. Eating-out services were a key contributor to food inflation, reflecting strong post-Lunar New Year demand and increased foreign arrivals. Meanwhile, despite a 3% year-to-date rebound, gasoline prices remained at a low level, helping to contain overall cost pressures and to support purchasing power. These factors contributed to a 9.4% increase in retail sales, which also benefited from a sharp recovery in international tourism. Vietnam welcomed 3.96 million foreign visitors in the first two months, a 30.2% y/y increase, with Chinese arrivals surging 77.8% y/y to account for 24.1% of total inbound tourists, surpassing South Korea as the largest source market.

Supply chain relocation continues to benefit Vietnam. Total FDI registrations reached $6.9 billion, up 35.5% y/y, while actual disbursements increased 5.4% to $3.0 billion. The manufacturing sector continued to dominate, capturing 70.8% of total inflows as global firms expanded their supply chain diversification in Vietnam. At a meeting with Prime Minister Pham Minh Chinh on February 12, the CEO of Samsung Vietnam reaffirmed the company’s commitment to expanding investments into AI, semiconductors, and digital transformation.

Slight improvement in manufacturing, though cautious optimism was observed. Manufacturing activity saw a modest pickup, with the Purchasing Managers’ Index (PMI) rising from 48.9 in January to 49.2 in February, though new orders continued to fall. Firms continued purchasing raw materials to secure supply chains amid global trade uncertainties. However, the survey also pointed out that business confidence is gradually improving in the upcoming path of manufacturing output. This was mirrored in trade performance, where exports and imports grew 8.4% y/y and 15.9% y/y, respectively. Vietnam maintained a trade surplus of $1.5 billion for the first two months of 2025.

Vietnam’s National Assembly concluded a high-stakes session (Feb 12-19), approving several key policies to accelerate economic expansion, enhance efficiency, and unlock investment potential. With global uncertainties rising, policymakers are focusing on the domestic economy where decisive action can make a difference. The GDP growth target was revised upward from 6.5% to 8.0%, while new investment policies and special mechanisms for large-scale infrastructure and energy projects were introduced. Public investment surged 21.7% y/y, reinforcing its role as a major economic driver. Progress continued with major projects such as the North-South Expressway and the Long Thanh International Airport, with three new highways totaling 172 kilometers targeted for completion by April.

The risk of reciprocal tariffs for Vietnam is low. According to the World Integrated Trade Solution (WITS), Vietnam, taxes U.S. imports at a lower rate than the U.S. taxes Vietnamese goods. In addition, with the approval of a pilot program allowing foreign investment in satellite telecommunications networks, SpaceX, the parent company of Starlink, making it a potential candidate to enter the market. The timing is notable as SpaceX announced plans to invest $1.5 billion in Vietnam, signaling a strategy of strengthening economic ties with the U.S. while reducing the risk of Vietnam becoming a target in a potential Trump 2.0 trade war.

The USD appreciated by 0.6% against the VND year-to-date. After softening 1.5% in January and remaining stable till mid-February, the USD regained strength amid global concerns about a potential trade war and U.S. tariffs. On the back of elevated volatility and the likelihood of retaliation measures, we think that the pressure for the VND may persist. That said, Vietnam’s interest rate differential with the U.S. is close to zero now. What is more, given the experience of a weaker USD in Trump’s first term, the pressure is expected to ease gradually, especially as the FED is already in an easing cycle. We maintain our forecast that the VND will depreciate 3% in 2025.

Vietnam is actively pursuing a credit rating upgrade, with Prime Minister Pham Minh Chinh engaging with S&P Global Ratings’ Chief Commercial Officer Lynn Maxwell, to emphasize the country’s strong economic trajectory. He highlighted a GDP growth rate of 7.1% in 2024, an 8.0% target for 2025, and ongoing efforts to enhance financial system resilience. S&P’s recent acquisition of a 43.4% stake in FiinRatings, one of the four domestic credit rating agencies, reflects confidence in the local capital market. This investment not only raises domestic credit-rating standards but also signals increasing international recognition of market potential, reinforcing efforts toward deeper integration into global financial markets. Notably, Vietnam’s sovereign credit rating remains just one notch below investment grade, and a potential upgrade is expected to attract significant capital inflows.

Vietnam’s Update – Stock Market

The VN-Index extended its upward trajectory in February, gaining 1.3% as market sentiment improved post-Tet. Liquidity rebounded following the holiday, reflecting growing investor confidence in Vietnam’s economic outlook. External pressures from the Trump 2.0 administration eased, as Vietnam appears unlikely to be a primary target of the U.S.’s reciprocal tariff measures. This shift allowed domestic investors to refocus on domestic economic conditions and corporate earnings, both of which are expected to remain strong throughout the year.

Trading activity strengthened, with rising participation from local investors offsetting continued foreign outflows. The average daily trading volume increased to $702 million, a 38.7% improvement from pre-Tet January levels, underscoring renewed market confidence amid key economic and policy developments. Local individuals absorbed selling pressure from foreign investors. While foreign outflows reached $654 million year-to-date, the pace of selling has moderated, suggesting a potential shift in sentiment.

Banking, real estate, and materials led sectoral gains, while technology lagged due to global volatility. The financial sector rose 1.9%, driven by strong credit growth (16% target) and expectations of improved asset quality. Real estate advanced 2.6%, supported by the implementation of Resolution 170, which unlocked key projects in major cities, subsequently fueling demand for construction materials and industrials. The materials sector, up 6.2%, benefited from tariff measures on Chinese HRC imports, bolstering the outlook for domestic steelmakers, particularly HPG (+3.5%). In contrast, the technology sector declined 9.5%, as global tech volatility led to profit-taking following strong gains in late 2024.

Vietnam’s market outlook remains positive, with key structural factors supporting long-term investment prospects. Ongoing regulatory enhancements and encouraging infrastructure developments continue to increase the market’s attractiveness, while a potential upgrade to an emerging market status could unlock substantial foreign capital inflows. Concerns over potential tariffs under a second Trump presidency may weigh on sentiment, particularly given Vietnam’s $104 billion trade surplus with the U.S. in 2024. However, as previously noted, we think that the likelihood of reciprocal tariffs remains rather low. Meanwhile, the government’s strong commitment to economic growth is expected to drive corporate earnings, with the top 100 listed stocks projected to achieve 15.6% EPS growth in 2025, reinforcing solid fundamentals. The VN-Index’s 2025F P/E of 11.3x remains compelling compared to regional markets, positioning Vietnam as an attractive diversification opportunity for global investors.

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Please download the February 2025 Factsheet for our TIM Vietnam Actively Managed Certificate. We are also offering investment advisory mandates and research services for the Vietnamese stock market. Furthermore, we offer our clients Discretionary and Investment Advisory Mandates for the purpose of investing in listed Vietnamese equities.

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