May 2025 Macroeconomic & Stock Market Highlights for Vietnam

We would like to present you our monthly Macroeconomic & Stock Market Highlights for Vietnam alongside with the monthly performance update of the TIM Vietnam Actively Managed Certificate for May 2025.

Watch our video recap of key takeaways of the Vietnam Marcroeconomic and Stock market in May 2025

Vietnam’s Update – Economy

• Vietnam continued to strengthen its international economic partnerships in May, enhancing both trade resilience and strategic positioning. The second round of trade negotiations with the United States concluded on a constructive note, with both sides agreeing to resume discussions in early June—signaling a commitment to building a more balanced and mutually beneficial relationship. In parallel, Vietnam elevated its ties with Thailand to a Comprehensive Strategic Partnership, aiming to deepen cooperation across trade and emerging industries. The state visit by French President Emmanuel Macron further expanded Vietnam’s international engagement, resulting in new agreements in aviation, defense, and energy, and reinforcing the country’s role in regional and global value chains.
• Making the private sector a central pillar of long-term economic growth. The Politburo issued Resolution 68, allowing R&D spending to be taxdeductible up to 20% of pre-tax profits, while small and medium-sized enterprises are granted corporate income tax exemptions during their first three years. To enhance the business environment, the government also targets a 30% reduction in licensing requirements, compliance costs, and administrative delays by 2025. These reforms support the broader goal of achieving annual private sector growth of 10–12% by 2030.
• Retail sales grew 9.7% y/y, buoyed by early-May holidays that lifted domestic spending and by resilient inbound tourism. International arrivals reached 9.2 million in the first five months, up 21.3 % y/y, underpinned by relaxed visa rules, more direct flights, subsidized airfares, and a wave of luxury-hotel investments that continue to enhance Vietnam’s appeal to travelers.
• Inflation remained contained, with CPI rising 3.2% y/y. The increase was led by food, healthcare, and electricity. Higher pork prices and dining-out costs pushed food inflation higher, partly offset by a 20% YTD decline in rice prices. Healthcare costs reflected government fee adjustments and seasonal flu outbreaks, while the mid-May 4.8% hike in electricity tariffs was only partly captured. A 5.7% drop in transportation costs, driven by cheaper gasoline, also helped keep overall inflation in check.
• The manufacturing PMI recovered to 49.8 in May from 45.6 in April. Despite ongoing weakness in new orders, May exports rose 17 % y/y as producers front-loaded shipments during the 90-day tariff reprieve. Imports gained 14.1 % y/y in the same period, suggesting firms continued to stock up on raw materials. These trends should point to further export growth in June, though momentum is likely to ease thereafter.
• FDI sentiment is gradually stabilizing after April’s tariff shock. In May, FDI disbursements reached USD 2.2 billion (+20 % m/m) and new registrations rose to USD 4.6 billion, twice the previous month. Our talks with industry experts in industrial park firms pointed out that site visits have largely returned to pre-tariff announcement levels following a brief two-to-three-week lull. Vietnam’s combination of skilled, cost-efficient labor, strategic location, and improving infrastructure should continue to support FDI inflows, though near-term momentum may remain sensitive to further trade developments.
• State disbursement increased by 17.5% y/y as infrastructure remained the key driver. Discussion on the $67 billion high speed railway project was the most prominent topic in May when two major conglomerates submitted the proposal to be the main investor for this mega project. The government is doing due diligence to make an assessment, and we will keep you posted once further communication from the government is announced.
• USD/VND was little changed in May, mirroring the flat DXY. Although the greenback eased against several major currencies, the VND stayed near recent lows as the SBV kept policy rates low and the year-to-date trade surplus narrowed vs last year. However, we expect the VND to appreciate toward year-end, underpinned by continued FDI inflow as firms adapt to the new tariff landscape, a likely rise in VND deposit rates alongside stronger credit demand, and a still-weak U.S. dollar.

Vietnam’s Update – Stock Market

• The VN-Index rebounded in May, delivering a total return of 9.1% as investor sentiment improved across both domestic and external fronts. The recovery was supported by constructive trade talks between Vietnam and the U.S., which signaled a less negative outcome. Easing tensions between the U.S. and China also contributed to a more stable external environment. Domestically, optimism surrounding the Politburo’s Resolution 68, which underscores the private sector’s role in driving growth, boosted confidence among local investors. As a result, the average daily trading volume rose to $835 million, which is 30% higher than Q1, while foreign investors returned to net buying mode, recording inflows of $18.7 million for the month.
• All major sectors posted strong gains in May, led by a sharp rebound in Real Estate, which surged 28.7% and accounted for nearly half of the VNIndex’s monthly return. The sector benefited from aggressive government-led infrastructure spending that lifted sentiment around residential developers. Industrial real estate stocks rebounded from oversold levels and optimism around trade negotiations with the U.S. further supported the sentiment. Financials and Industrials were also key contributors, rising 4.2% and 10.9%, respectively. Techcombank (TCB) outperformed in the Financials sector, driven by a potential IPO for its securities arm. Meanwhile, Industrials saw a broad-based recovery in line with overall market strength.
• The VN-Index rose 3.7% year-to-date by the end of May, with Vingroup-related companies contributed 7.5% to the gain. Vingroup (VIC), Vinhomes (VHM), Vinpearl (VPL), and Vincom Retail (VRE) together made up 13.3% of the index’s market capitalization, and all posted strong performances year-to-date. The rally was driven by several reasons, including newly approved VHM projects, the listing of VPL, and Vingroup’s proposal to serve as the main investor for the $67 billion North–South high-speed railway. Despite recent gains, we maintain a cautious stance on the group given continued challenges in the automotive segment and elevated financial leverage—VIC’s asset-to-equity ratio stood at 5.2x at the end of Q1/2025. Participation in a mega infrastructure project could further increase leverage, raising pressure for its financials.
• Uncertainties remain, but our outlook is still optimistic. While the trade landscape is still uncertain, we believe the worst of the tensions has passed, as Vietnam–U.S. negotiations continue on a constructive track and both the U.S. and China have shown willingness to de-escalate through reciprocal tariff reductions. A weakening U.S. dollar typically supports capital flows into emerging and frontier markets—a trend already showing early signs since May. More importantly, Vietnam’s fundamentals is resilient, with EPS growth for the top 100 listed companies projected at 14.7% and valuations still attractive, trading at a 2025F P/E of 11.7x. Given 80% of the trading volume is retail investors, speculation and momentum trading in the short term is inevitable, but we think money flow eventually going to firms having healthy balance sheet and solid earnings growth.

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