News and Insights

In August, the manufacturing sector continued to strengthen. The index of industrial production (IIP) increased by 2.2% month-over-month (MoM) or 8.9% year-over-year (YoY) in August. The Manufacturing PMI remained in expansionary territory, although at slower pace in August to reach 50.4. This is in line with the exports data showing slightly slower growth than previous months, but still resilient at 15.4% YoY in August and 14.8% YoY in 8M25. Electronics and laptop exports continued to post impressive growth of 50.4% YoY in August and 43% YTD, despite semiconductor’s tariff threat of 100%. On the other hand, the decline in apparel exports of -5% YoY might be attributable to the front-loading activities in previous months. Overall, the trade balance reached USD 3.7bn in August and USD 13.99 bn YTD, slightly lower than previous year of USD 19bn.

Public investment disbursement maintained strong momentum at VND 70.7 tn in August (+49.2% YoY), bringing YTD disbursement to reach VND 409 tn, having achieved 46.3% of the Prime Minister’s revised plan or 49.5% of the initial plan. Notably on 19 August 2025, Vietnam marked the 80th National Day with the inauguration and groundbreaking of 250 projects nationwide, representing a combined investment of VND 1.28 quadrillion across 34 provinces and cities. FDI disbursement increased by 8.8% YoY to USD 15.4 bn over the first eight months of 2025. Newly registered and additional FDI also grew at a rate of 22.4% YoY, reaching USD 21.7 billion, the highest level in the past five years. Regarding private investments, credit growth was estimated at 11.35% year-to-date (YTD) as of August 26th, much higher than last year of 7.3% YTD and even surpass the 2022 level of 10% YTD. As a result, in early August, the State Bank of Vietnam (SBV) has proactively raised 2025 credit growth quotas for certain credit institutions based on clear, transparent principles, without requiring requests from them like previous year, in order to support the recent’s government revised GDP growth target of 8.3-8.5%.

In August, large-scale activities celebrating the 80th anniversary of the National Day of the Socialist Republic of Vietnam significantly boosted consumption of goods, services, and tourism. Total retail sales of goods and consumer service revenue in August were estimated to rise 10.6% YoY and 9.4% YoY for 8M25, including a 14.7%  YoY rise in accommodation and catering services and a 20.3% YoY rise in travel and tourism services. Real consumption increased 7.2% YoY for 8M25.

In August, the Consumer Price Index (CPI) barely increased 0.05% from the previous month, mainly driven by higher accommodation costs (renting expenses +0.28% MoM and electricity +1% MoM) and out-of-home dining expenses (+0.2% MoM). Headline inflation increased 2.18% YTD and 3.24% YoY in August. Thus, inflation averaged 3.25% YoY over the past eight months, within the Government’s target range of 4.0% – 4.5% YoY. The reduction in inflationary pressure in August was mainly due to a 0.2% MoM drop in gasoline prices, and hog price drop of 2.42% MoM, reducing pressure on food and foodstuff (-0.06% MoM). Average core inflation maintained at 3.19% YoY.

The Vietnamese dong (VND) weakened a further 0.6% MoM against the USD in August, bringing YTD depreciation to 3.4%. On August 21, the USDVND briefly touched a record low of 26,433 (nearly 1% weaker MTD) before the State Bank of Vietnam (SBV) intervened by offering USD via 180-day cancellable forwards at 26,550/USD, slightly above the prevailing selling rate of 26,512. Registered demand reached USD 1.5bn. This intervention coincided with Fed Chair Jerome Powell’s Jackson Hole speech, where he acknowledged labor market softening and left open the possibility of rate cuts as early as September. The SBV’s pre-emptive action, coupled with dovish Fed signals, may help ease near-term pressure on the VND. We expect partial retracement of YTD losses from Q4 2025. On liquidity, the SBV withdrew a net VND 25.2 trillion in August, reducing outstanding system liquidity to VND 182 trillion. Interbank overnight rates, which averaged 5% in early August, eased to 2% by month-end, reflecting improved funding conditions. Unlike late June–July, no episodes of one-off liquidity stress were observed.

In August, the VN-Index sustained its bull run, climbing 11.5% MoM and extending its YTD gain to 32.8%. Average daily trading value reached unprecedented levels at USD 2.09 bn (VND 55 tn) in August, up 41.5% MoM and 197% YoY. A single session saw USD 2.8 bn traded on August 5 and marks a record peak for market liquidity. Several factors fueled this surge: (i) low interest rate environment, (ii) robust credit growth, solid infrastructure spending and strong macro fundamentals and (iii) positive sentiment around a potential market upgrade announcement in October. Nevertheless, foreign investors sharply reversed their July buying momentum and triggered selling in August . Outflows reached USD 1.7 bn (VND 42.2 tn) during August, bringing YTD net-selling value of USD 2.9 bn (VND 73.3 tn) (vs. USD 3.5 bn total net sold during 2024). SK’s investment’s sizeable offloading of Vingroup shares, totaling VND 12 tn in early August played a major role in these outflows. FPT and HPG are the other large-cap favourites, each saw around VND 4.6 tn net selling during the month. Key drivers appear to be aggressive profit-taking after the VN‑Index’s sharp outperformance, concerns over VND depreciation, and perhaps a wait-and-see stance ahead of the FTSE upgrade among foreign investors.

Most sectors posted positive returns in August, with Financials (+19.2% MoM), Real estate (+14.8% MoM) and Energy (+13.9% MoM) being the best performance. Liquidity into the banking and brokerage sector accounted for 50% of total trading value, led by MBB, VPB and SSI, fueled by news regarding digital assets and IPO of bank-backed securities firms (TCBS, VPBS and VPS). Real estate sectors attracted flow thanks to the coming back of Vingroup stocks after some weeks of accumulation.

The VN-Index is currently trading at a trailing P/E ratio of 16.3x, higher than its average P/E ratio of 14.6x over the past three years but below the 5-year average of 16.7x. Consequently, the market is vulnerable to a near-term pullback. Nonetheless, we maintain a positive outlook on Vietnam’s stock market for the rest of the year, supported by (i) the potential Federal Reserve rate cut in September, (ii) strong economic activity, and (iii) anticipated rapid growth in earnings in the second half of 2025.