Executive Summary
Vietnam’s GDP grew by 8% in 2025 and the VN-Index surged 37% (in USD terms). The Government expects GDP growth to accelerate to 10% in 2026, and we also expect very strong growth this year, driven by:
- Soaring infrastructure spending. Up around 40% in 2025, infrastructure spending looks set to grow by another 20-30% in 2026.
- Resilient exports. Vietnam’s “New Export Orders” index hit its highest level in over a year in late-2025, supported by AI-driven demand and the continued strength of US consumers.
- Modest consumption recovery. Households have made meaningful progress rebuilding their savings post-pandemic and are buoyed by increases in the real estate and stock markets.
Promoting the Private Sector. Vietnam’s Doi Moi 2.0 structural reforms are promoting the private sector and should ultimately add 2%pts to the country’s GDP growth. These reforms are translating into a range of investment opportunities for firms like VinaCapital, including data centers, transport-oriented development (TOD), power generation, and initiatives related to the establishment of an International Financial Center (IFC). We expect a combination of private sector initiatives, generational change, and AI-led developments to lead to a pickup in activity for VinaCapital’s private equity team over the next few years following a fairly quiet 2025.
Reform Agenda Rocket Fuel for 2026-27. While the Government’s reform agenda will boost long-term GDP growth, in 2025 policy makers took steps to immediately unfreeze the real estate market by addressing the approvals issues that are the primary bottleneck for an estimated 80% of the country’s stalled projects. Several moribund building projects sprung back to life in 2025 as the issues impeding specific projects were addressed on a case-by-case basis; recently enacted legislation will address the issue nationwide and are expected to unleash a surge of real estate supply into the market, opening investment opportunities for VinaCapital’s real estate team. Furthermore, in advance of Vietnam’s Communist Party Congress (CPC), international media reported that it appears to be clear that the economic reform agenda will continue its momentum going forward and we also believe that the Government’s pro-growth policies will remain firmly in place.
Stock Market Opportunities. The VN-Index (VNI) is trading at 13x forward P/E versus 18% expected earnings growth, or a 0.7x PEG ratio. We believe positive factors such as the anticipated FTSE upgrade this year will present opportunities in the public markets, particularly as more private companies come to market in IPOs. We also believe that investing in Vietnam is best served by “bottom-up” stock picking skills that require a deep understanding of individual companies as investors will face a “Mosaic of Idiosyncrasies” in 2026.
Risks. Tight liquidity in Vietnam’s banking system is the biggest risk to the positive scenario for Vietnam’s economy and stock market. Credit growth outpaced deposit growth by 4%pts in 2025 (19% vs 15%), leaving the country’s commercial banks with an estimated USD 40b deposit shortfall, according to data from the State Bank of Vietnam. This mismatch helped drive 12-month bank deposit rates up by about 100 basis points (bps) in 2025 and recently prompted Government officials to call for more muted credit growth in 2026. We expect another 50-100 bps increase in 2026, to circa 7%, but we do not expect deposit rates to climb significantly above the 7-8% level at which investors tend to take their money out of the stock market. Critically, Vietnam’s policymakers have powerful tools to address the issue, including central bank balance sheet expansion and depositing some of the Government’s own cash reserves into the banks.
Closet Indexing Dilemma. In 2025, the VN-Index was driven by a handful of stocks, without which the VNI would have been up by just 9%. Vingroup (VIC) was up nearly 711% on the back of a very low free float and trading volumes. The surge in VIC’s share price lifted its weighting in the VNI to 16% and the weighting of VIC group companies to nearly a quarter of the index, giving local fund managers a “closet indexing” dilemma comparable to American fund managers compelled to own “Mag 7” stocks to prevent outflows from their funds. We mentioned above that the VNI is trading at 13x P/E, but its valuation excluding VIC-related stocks is closer to 11x, and the stock prices of many good companies underperformed the VNI last year. VinaCapital’s portfolio managers are fundamental investors with solid long-term performance records and are well positioned to take advantage of those bottom-up opportunities.
Other risks include a drop in exports to the US (which we think is unlikely) or a muted consumption recovery in Vietnam, which the Government also has powerful tools to address. Please refer to page 10 for a full discussion of risks.
Please download the report to get more insights into Vietnam’s market environment in 2026.
