Vietnam July 2025 Economic Outlook & Stock Market: Trade, Tourism, and Stocks Outperform

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 July 2025.

Watch our video recap of key takeaways of the Vietnam Marcroeconomic and Stock market in July 2025

Vietnam’s Update – Economy

• Vietnam has confirmed its trade agreement with the U.S., with the Ministry of Industry and Trade affirming the 20% tariff that President Trump will impose on imports from Vietnam. Other Southeast Asian countries secured similar terms, with only marginal differences in rates. In contrast, India faces a 25% tariff, giving Vietnam a competitive edge in key export sectors such as textiles, seafood, and electronics. The combination of higher tariffs on India and relatively uniform tariffs across Southeast Asia reinforces Vietnam’s appeal for FDI from companies seeking to diversify production away from China.
• Rising international tourism continues to bolster domestic spending. Retail sales grew 9.3% y/y, supported by strong tourist arrivals. Vietnam welcomed 12.2 million visitors in the first seven months of 2025, up 22.5% y/y, with all major markets like China, South Korea, and Europe, exceeding pre-COVID levels by 5–7%. Easing visa requirements, expanded direct flight networks, and government incentives for foreign travel agencies have provided additional tailwinds to the tourism sector.
• Inflation moderated to 3.2% y/y. Price gains were driven by higher construction material costs amid tight supply and strong infrastructure demand, as well as increased household electricity consumption during peak summer heat. Eating-out costs also rose as small businesses complied with stricter regulations from July 1, passing part of the additional expense to consumers. These pressures were partly offset by lower domestic fuel prices and promotional discounts on new vehicles, easing overall inflationary momentum.
• FDI disbursements reached US$13.6 billion (+8.4% y/y) in the first seven months, the highest for this period in five years—anchored by manufacturing. With tariff-related uncertainty easing, FDI inflows are expected to remain strong, supported by a robust project pipeline. In July, U.S.-based Coherent Corp., a leading semiconductor manufacturer, inaugurated its third Vietnamese plant with a total investment of US$127 million.
• Manufacturing activity strengthened, with the S&P Global PMI rising to 52.4 in July (from 49.9) as new orders grew for the first time in four months, reflecting improved customer demand. While some firms still cited U.S. tariff uncertainty as a headwind, sentiment improved after the trade agreement framework was reached. Trade performance remained firm, with July exports up 17.7% y/y and imports rising 18.3%, signaling sustained export momentum despite the fading of front-loaded orders. Cumulatively, exports and imports rose 14.8% y/y and 17.9% y/y in the first seven months, resulting in a US$6.3 billion trade surplus.
• Vietnam’s newly announced plastic ban and low-carbon market strategy will gradually phase out single-use plastics nationwide and launch a pilot carbon market targeting high-emission sectors such as steel, cement, and thermal power. While these policies will raise compliance costs for households and smaller firms, they will favor established players with the scale and resources to adapt and invest in cleaner production.
• The VND depreciated 0.5% against the USD in July and 3.2% year-to-date, despite the dollar weakening against most other major and regional currencies. This appears to be a short-term divergence. Over the past three and five years, the VND’s performance has been comparable to regional peers such as the Philippine peso and Indonesian rupiah but with lower volatility, reflecting the State Bank of Vietnam’s commitment to maintaining a narrow trading band to protect exports and contain imported inflation. Looking ahead, robust credit growth (+9.6% YTD) is likely to put upward pressure on interest rates, supporting the currency. Stricter controls on unrecorded capital outflows and a lower U.S. Fed funds rate should further strengthen the VND’s outlook.

Vietnam’s Update – Stock Market

• The VNIndex reached a new all-time high in July, delivering a full-month total return of 8.9%. The market began the month on a positive note with the completion of provincial mergers, expected to streamline legal procedures and reduce business costs. Optimism was further lifted by the announcement of a U.S.–Vietnam trade agreement framework and solid Q2 earnings results. Average daily trading volume hit a record $1.34 billion, while foreign investor sentiment showed early signs of recovery with net bought value of $326 million in July. Global investment banks, including JP Morgan and Morgan Stanley, also upgraded their outlook on Vietnam’s equity market.
• The Financials and Real Estate sector led the gain. Financials led the rally with an 11.4% gain, driven by strong bank performance supported by rapid credit disbursement and solid earnings growth. Real Estate and Materials also benefited from robust infrastructure investment, rising by 13.3% and 5.4% respectively. Meanwhile, Consumer Staples, Healthcare, and Information Technology posted modest gains. Year-to-date, the VNIndex increased by 16.4%, thanks to the surge of Vingroup-related stocks and Financials sector while others contributed modestly.
• Strong Q2/2025 earnings released. Aggregate net profit after minority interest of listed companies rose 32.0% in Q2 and 25.9% in H1/2025. Banks and real estate remained key drivers, with bank profits up 17.5% y/y and real estate earnings surging 132% y/y from a low base.
• Vingroup-related companies continued the rally despite weak earnings. The group attributed for a majority gain of the VNIndex year-to-date, but their stock performance remains disconnected from fundamentals. Vingroup (VIC, 2025F P/E of 31.9x and 2025F P/B of 2.9x) posted a Q2 loss of VND580.9bn, while Vinhomes (VHM) saw earnings decline 30.6% y/y. Concerns over VIC’s earnings quality persist, as its operating loss was offset entirely by a one-off donation from the Chairman to its subsidiary VinFast. Debt over equity ratio of VIC continued to rise to 1.8x by end of June 2025.
• Looking ahead, we remain optimistic about Vietnam’s broader equity market as opportunities continue to emerge. Excluding Vingroup-related companies, listed firms saw 27.7% earnings growth in H1/2025, while sectors like consumer staples, materials, and healthcare have yet to reflect their strong fundamentals, offering attractive accumulation potential. In addition, a potential FTSE Emerging Market upgrade and a weakening USD remain supportive tailwinds. The earnings outlook is also strong, with 2025F EPS growth for the top 100 stocks at 13.3%, and trading at a compelling forward P/E of 13.6x.

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Please download the July 2025 Factsheet for our TIM Vietnam Actively Managed Certificate.

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