Vietnam moves into era of national rising

• John Malloy
  Co-Head Emerging und Frontier Markets
  Redwheel

Economic reform programmes are creating new and sustainable sources of value across overlooked emerging markets. In our insights series, Harnessing reform as a catalyst for growth. We focus on markets where meaningful improvements in transparency, market liberalization and governance are paving the way for economic transformation.

In this context, Vietnam stand out. The country demonstrates dynamic reform momentum and rapidly evolving market structures that underpin a differentiated investment opportunity for global investors.

Vietnam: Record highs fuelled by reform

Vietnam’s financial markets have delivered exceptional results in 2025, with the MSCI Vietnam Index rising 51.1% year-to-date by the end of August, outstripping both the MSCI Frontier Market Index and most Asian peers. The rally reflected not just investor optimism but also the vigour of national reform and renewal as the country marks its 80^th National Day of Independence. Redwheel’s Emerging Market Equity strategy increased its Vietnam allocation in 2025 to 2.8%. The Redwheel Next Generation and Frontier strategies also maintain a high Vietnamese exposure at 10%

Structural advantages and nearshoring

Vietnam has emerged as a global hub for nearshoring and supply chain diversification, capitalizing on its political stability, youthful workforce, and strategic proximity to China. An expanding network of free trade agreements (FTAs) has underpinned rising foreign direct investment (FDI).

This has resulted in new FDI commitments of $38.2 billion by the end of 2024 (see Chart 3), a figure that has kept expanding in the first half of 2025 despite uncertainty around US tariff policy. Vietnam’s exports to the US amount to 25% of GDP and c.30% of total exports, making it one of the most vulnerable countries to trade levies. However, Vietnam’s competitiveness endures as similar levies are now broadly applied to other manufacturing countries.

Doi Moi 2.0: Domestic Reforms are accelerating

The appointment of To Lam as General Secretary in August 2024 has ushered in a new era of change for Vietnam, anchored by an ambitious “Era of National Rising” ahead of the 14^th Party Congress in 2026. By 2030, the government aims for upper middle-income status with GDP per capita above $5,000 and intends to shift GDP growth onto an 8% trajectory through major investment in infrastructure and public goods.

The reform framework emphasizes innovation and business competitiveness, targeting a 30% reduction in business costs and enhanced regulatory efficiency to place Vietnam among the ASEAN region’s top three investment destinations within two to three years. There is also a 2045 vision to reach high-income, developed-country status. 

Policy decisions are aligned to stimulate growth

Interest rates remain low and public debt is modest at 34% of GDP, offering substantial fiscal latitude to increase public investment. Resolution 68, announced in May 2025, officially puts private companies at the centre of Vietnam’s economy for the first time. This reform ensures equal treatment with state-owned firms, lays out a credible path for SOE privatization, and aims to support large domestic conglomerates.

Land law reform and provincial consolidation have created a more responsive environment for infrastructure investment. A massive infrastructure stimulus programme, ten percent of the nation’s GDP is in motion, directing funding to over 250 core transport and housing projects valued at $49 billion.

Exceptional liquidity and market participation

These reforms are already evident in Vietnam’s market structure. The Ho Chi Minh Stock Exchange has seen record daily trading volumes and surging margin lending, highlighting growing retail participation and increasing investor confidence. Despite these gains, market cap-to-GDP ratios remain below historical peaks, and valuations are attractive at 13x earnings versus a high of 17x in prior cycles.

Capital market modernization is also accelerating. The new Securities Law (effective 2025), deployment of upgraded trading infrastructure, and steps toward FTSE emerging market status highlight Vietnam’s intent to attract a larger pool of foreign portfolio investors.

Reshoring and consumer spending

Several sectors stand to benefit disproportionately from these changes. We believe that Vietnam’s leading steel producer, Hoa Phat Group, is positioned to leverage growing FDI and infrastructure investments and is on track to make the country self-sufficient in hot-rolled coil production. Consumer-focused firms like leading mall developer Vincom Retail are capitalizing on the real estate recovery, while Masan Group runs at the forefront of modern grocery and consumer goods distribution as retail formalization accelerates.

Financial inclusion

In banking, institutions such as Techcombank and Military Bank have seen resilient loan growth behind stable net margins. The likely abolition of Vietnam’s credit quota system in 2026 will further align lending practices with international norms and support further asset growth.

Brokerage firms such as Saigon Securities are reaping rewards from regulatory upgrades and infrastructure enhancements outlined above that have made 2025 a defining year for capital markets.

Taken together, Vietnam’s commitment to reform, robust FDI flows, and active capital market modernization provide a powerful case for continued re-rating and sustainable growth.