Public spending, private capital, and market confidence – August 2025

Chart of the Month

Monthly Insights: Public spending and private capital fueled market resilience

Vietnam’s equity market delivered another strong month in August, with the VNI repeatedly setting new records and briefly approaching 1,700 before late-month profit taking. The index gained 11.5% in total return USD terms, its best performance since May 2020. Liquidity was exceptionally strong, with combined daily turnover averaging $1.9bn and peaking at $3.3bn on 5 August.

Domestic participation was a key driver, with more than 250,000 new trading accounts opened in August, up 13.8% MoM. This offset continued net foreign selling, which was concentrated in a Vingroup block trade and in banks, steel, and technology. The rally is still being driven primarily by domestic retail investors, while foreign flows remain cautious. Momentum and liquidity are strong, but volatility is likely to persist, with profit taking and shifts in trade, geopolitics, or FX acting as potential triggers.

Notably, the equity market’s IPO pipeline has reignited with strong momentum. Techcom Securities (TCBS) is finalising its listing, which is expected by year-end. With a projected market capitalisation above $4.0bn, TCBS could become Vietnam’s largest listed brokerage. This has already triggered a mid-August re-rating among peers, underscoring the sector’s sensitivity to listing milestones and showing how upcoming IPOs can act as catalysts.

Following TCBS’s lead, VP Bank Securities is also preparing for an IPO, aiming to raise approximately $170mn with a potential float of 25% expected within the coming quarters. Additional offerings are anticipated from infrastructure and retail-oriented groups including Gelex Infrastructure, CP Group, Highland Coffee, and spin-offs from Mobile World retail chains.

Macro and sector indicators reinforced the positive backdrop. Public investment disbursements surged 34.5% YoY in August, while implemented FDI rose 12.5%, lifting total registered commitments 27.3% YoY to $26.1bn, highlighting the strong support from both public and private capital. Trade activity maintained double-digit growth, with August exports rising 14.5% YoY and imports climbing 17.7%, resulting in a monthly trade surplus of approximately $3.7bn. Inflation remained well controlled, with August CPI up 3.2% YoY and core inflation stabilising around 3.2%, slightly easing from July. Industrial production expanded by 8.9% YoY, while PMI retreated marginally to 50.4 as order flows normalised from July’s elevated levels.

The banking sector saw high credit growth of approximately 11.1% YTD. The State Bank halved reserve requirements for banks under transfer programmes and used cancellable forward contracts to stabilise the VND, which has depreciated about 3.3% YTD, reflecting a willingness to act decisively to support both liquidity and currency stability.

The government also advanced the regulation of digital assets, with Resolution 5/2025 launching a five-year pilot framework for issuance and trading. Licensed platforms will require a minimum of approximately $380mn in capital with majority institutional backing, while foreign ownership will be capped at 49%. Transactions must be settled in VND, and only Vietnamese firms may issue new assets, which will be available exclusively to foreign investors.

With Vietnam already ranking 5th globally in crypto adoption and an estimated $100bn in holdings, the framework is a significant step in formalising a rapidly expanding market. We believe this framework reduces the risk of speculative volatility by limiting unregulated platforms, while aligning with the broader push to deepen Vietnam’s capital markets. It also signals the government’s intent to position the country as a regulated hub for digital assets in Asia, which could attract new capital inflows, but will depend heavily on execution.