With renewed resolve, Vietnam will enter the Year of the Horse with aspirations and ambitions that reflect its transformative journey. In my thirty-year association with the country, I have rarely encountered such a positive outlook.
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| Dr. Christian Kamm |
Several significant factors foster an optimistic view of Vietnam’s potential. As it embarks on a new era, the nation is ripe for historical change, characterized by the alignment of fiscal policies, monetary strategies, and both domestic and foreign investment interests. When these elements coalesce around a shared goal of sustainable progress, the result is substantial growth—a phase that Vietnam is evidently approaching.
The recent approval of state budget estimates for 2026 marks a pivotal moment, as policymakers have reaffirmed their commitment to economic activity by expanding fiscal policy to unprecedented levels. The 2026-2030 development investment plan envisions a 50% increase compared to the previous five-year framework. This ambitious yet achievable goal is made possible by Vietnam’s relatively low debt-to-GDP ratio compared to its Southeast Asian peers. This focus on development aims not only to enhance infrastructure but also to ensure the country can secure major foreign investments.
When a government enhances its commitment to development, it builds confidence in future prospects—an outcome that naturally attracts foreign direct investment (FDI). Such investments often coincide with fiscal policies, creating a symbiotic relationship where foreign interests seize opportunities, particularly in tech-related projects that promise high returns for both the nation and investors.
Generating Interest
Interestingly, in 2025, while global FDI declined, Vietnam achieved a remarkable 9% growth in foreign direct investment, underscoring its attractiveness as an investment destination. As Vietnam continues to compete for significant foreign-led projects, especially in infrastructure and technology, steady and growing FDI can profoundly influence the economy by stabilizing GDP—a crucial indicator of sound governmental economic policy.
Ordered and strategic FDI holds inflation in check while boosting employment and per capita income, thereby enhancing the standard of living. A notable effort by the Vietnamese government is to simplify the investment process and eliminate bureaucratic hurdles, an essential change for a conducive business environment. A favorable investment climate can either attract or repel foreign capital, and the ongoing reforms aim to present Vietnam as a desirable investment hub.
The upcoming upgrade to FTSE emerging market status will further open the gates for foreign indirect funding into the Vietnamese stock market. Funds aligned with the FTSE Emerging Market Index will need to invest in Vietnam, yielding substantial investment that may exceed expectations. The accompanying positive sentiment, driven by such recognition, could prove highly beneficial.
As a result, the stock market is poised for a promising trajectory, potentially ranking among the top performers globally this year.
Prominent Features
Additionally, increasing foreign interest may catalyze the development of a less concentrated corporate bond market, creating more opportunities for investments and auguring stability in monetary policy. With passive capital flows entering Vietnam from global funds seeking allocation in favorable markets, it is likely that large-cap stocks will be the initial beneficiaries, followed by mid-cap and small-cap stocks. This escalating trading volume can cause the entire market to elevate over time, fostering a favorable investment sentiment.
Currently, the Vietnam stock market appears attractive on valuation metrics. Indicators like adjusted price-to-earnings and price-to-sales ratios reflect that it remains relatively inexpensive compared to most Asian markets. Even when evaluated against other developing nations, Vietnam stands out as an affordable market, particularly at a time when sustainable economic growth looms on the horizon.
As corporate profits rise alongside economic growth, higher consumer spending typically follows, facilitating further corporate profit expansion. This cyclical relationship signals an uptrend in GDP, leading to appreciation of stock valuations and enhancing Vietnam’s international investment appeal.
Despite prevalent geopolitical tensions that could threaten this positive narrative for Vietnam, macroeconomic stability—if sustained—can provide a solid backdrop for growth. Current global uncertainties, including potential AI market fluctuations and inflation from tariff complications, may put Vietnam’s progress to the test.
However, the internal strengths that characterize Vietnam today demonstrate an unwavering commitment to advance despite external challenges. In my opinion, while geopolitical tensions may slow momentum, they are unlikely to derail the impressive trajectory Vietnam has embarked upon.