Post by : Anis Farhan

A bull run with growing speed

Vietnam’s stock market has emerged as one of Asia’s most exciting—and volatile—financial stories of 2025. After years of relatively modest performance, the Ho Chi Minh Stock Exchange (HOSE) has surged nearly 38% year-to-date, making it one of the world’s best-performing bourses this year.

Driving this rally is a potent mix of rising foreign capital, a wave of successful tech IPOs, and optimism about Vietnam’s resilient economy, which is projected to grow by 6.8% in 2025. Retail investor participation is also near record levels, with more than 400,000 new accounts opened in the first five months of the year.

But beneath the euphoria, analysts and regulators are sounding alarms about overvalued stocks, speculative trading behaviors, and regulatory blind spots. The central question now looming over the rally: Is Vietnam’s stock market boom sustainable—or a bubble waiting to burst?

Foreign capital fuels the surge

A key driver of Vietnam’s market surge has been strong foreign portfolio investment (FPI). As global investors look for high-growth, politically stable markets in Asia, Vietnam’s fundamentals—young population, export diversity, and rising middle class—make it an attractive destination.

Major institutional players from Japan, South Korea, and Singapore have significantly increased their exposure to Vietnamese equities. The VN30 index, which tracks the country’s largest and most liquid stocks, has seen substantial foreign inflows into sectors like banking, logistics, and renewable energy.

Vietnam’s recent progress toward being upgraded from a frontier to emerging market status by MSCI and FTSE Russell has added further momentum, as global funds seek to position themselves ahead of index reweightings.

Homegrown IPOs electrify the market

Vietnam’s tech sector has added to the excitement. In early 2025, the IPO of VinaTech, a fast-growing fintech platform, raised over $350 million USD, becoming the largest domestic tech listing in the country’s history. Soon after, logistics automation startup AutoPort Vietnam and health data firm MediLink followed with successful market debuts, drawing retail and institutional interest alike.

These listings reflect a broader shift: Vietnam is now producing a generation of scalable, tech-driven businesses capable of attracting both local and foreign capital. Government reforms to ease listing requirements for tech startups—such as profit waivers and sandbox trials—have encouraged more innovative firms to go public earlier in their growth cycles.

However, these IPOs are also contributing to skyrocketing valuations, with some new listings trading at P/E multiples upwards of 60—raising concerns about long-term sustainability.

Retail frenzy and speculative risk

Retail investors—many of them first-timers—have played a central role in the rally. Fueled by social media, mobile trading apps, and a general distrust of property as a stable investment class, Vietnam’s middle-class savers are pouring money into equities like never before.

Daily trading volumes on HOSE have consistently exceeded 25 trillion VND (over $1 billion USD) since April 2025, led by retail players chasing short-term momentum. A recent survey by the Vietnam Securities Depository shows that more than 60% of new investors are under 35 and have no prior financial training.

This has led to speculative surges in small-cap stocks and penny shares, many of which have no earnings, weak governance, or unclear business models. Market observers warn that a sharp correction in even a few high-flying stocks could trigger panic selling and cascade effects across the market.

Regulatory gaps and governance challenges

While the State Securities Commission of Vietnam (SSC) has taken steps to improve transparency—such as enhancing financial reporting standards and tightening insider trading rules—many feel that regulation is still playing catch-up.

Auditing practices, for example, vary significantly across listed companies. Some investors have raised concerns about “related-party transactions” in family-run firms, a common feature in Vietnam’s corporate landscape. Enforcement of corporate governance codes remains inconsistent, especially outside the VN30 index.

Moreover, there is no short-selling mechanism currently in place, limiting hedging strategies and creating a market structure biased toward optimism. Critics argue that this fosters one-way speculation and reduces the sophistication of the trading environment.

In response, the SSC announced a draft policy in June 2025 to introduce covered short selling and a central clearinghouse system by mid-2026, but implementation may take time.

Macroeconomic headwinds on the horizon

Vietnam’s macroeconomic fundamentals remain strong, but they are not immune to external shocks. Rising energy prices, a strong U.S. dollar, and a cooling in global electronics demand—especially from China and Europe—could hurt export earnings in the second half of 2025.

At the same time, inflationary pressure at home is beginning to creep upward, with consumer prices rising 3.4% in May—prompting the State Bank of Vietnam (SBV) to hint at a possible tightening of interest rates. If borrowing costs rise sharply, liquidity in the equity market could take a hit.

Meanwhile, Vietnam’s real estate sector, once a magnet for retail investors, remains sluggish, pushing more speculative capital into equities. But this diversion also raises the risk of capital misallocation, as investors pile into momentum trades rather than long-term fundamentals.

Path forward: Can reforms keep pace with growth?

To ensure that its stock market remains a pillar of sustainable economic development—not a speculative casino—Vietnam will need to accelerate reforms on multiple fronts. These include:

• Improving corporate governance disclosures, especially for mid-cap and newly listed firms.

• Expanding financial literacy programs to educate new investors on risk and long-term investing.

• Fast-tracking the implementation of short selling, derivatives, and institutional risk management tools.

• Strengthening coordination between the SSC, SBV, and Ministry of Finance to monitor market volatility.

If managed well, Vietnam’s market could evolve into a mature, liquid, and transparent ecosystem—attracting stable, long-term capital to power the next stage of its economic rise.

Disclaimer

This article is intended for informational purposes only and does not constitute financial, investment, or trading advice. Readers should consult licensed professionals before making investment decisions.