News and Insights

• October data confirms that Vietnam’s growth story remains intact, driven by strong industrial and external performance while domestic consumption was weaker than expectations given the impact of flooding across several regions.
• Inflation averaged 3.27% YoY over the past ten months, still in check within the Government’s target range of 4.0% – 4.5% YoY for 2025, while the USD/VND appreciated 0.4% MoM. There has been pressure on the deposit rates given strong credit growth YTD.
• The stock market took a breather in October as the VN-Index corrected 1.3% to end the month at 1,640 given profit taking and persistent foreign net selling in the month, despite the announcement of FTSE on upgrading Vietnam to Secondary Emerging market status on Oct 8.

 

The manufacturing sector continued to be resilient in October. The index of industrial production (IIP) increased by 2.4% month-over-month (MoM) or 10.8% year-over-year (YoY). Manufacturing maintained robust momentum, increased 11.4% YoY, electricity production up 11% YoY and the growth of employees in the manufacturing sector also posted an increase of 3.6% YoY in October. Trade activities, closely linked with industrial production, were solid in October with double-digit growth in both exports (up 17.5% YoY) and imports (up 16.8% YoY). Trade surplus amounted to USD 2.6 billion in October and USD 19.6 billion through the first ten months of the year. By market, trade dynamics remained robust with resilient US demand and sustained inflows from China. Exports to the US rose 27.6% YoY to USD 126.2 bn, while imports from China increased 28.1% YoY to USD 150.9 bn. PMI increased to 54.5 in October, also marked the highest reading since July 2024, as new orders expanded for the second consecutive month, reaching its strongest level since July 2024. Sharp and accelerated increases in output and new orders were recorded, while employment expanded for the first time in just over a year.

 

Foreign direct investment (FDI) remained robust in October with FDI disbursement over the first ten months of 2025 increasing by 8.8% YoY to USD 21.3 billion, which is the highest level in the past five years. FDI commitments also grew by 15.6% YoY to reach USD 31.5 billion. The processing & manufacturing sector continued to account for the lion share of total FDI commitments at nearly 57%, confirming Vietnam’s attractiveness as a production hub for multinational corporations. In contrast, public investment remained slow and has not seen significant improvement due to the impact of several typhoons for the last few months. Public investment rose by 40% YoY over the first ten months of this year, achieving VND 486 trillion or only 55% of the full-year target with two months left.

Consumption remained soft in October, with retail sales increasing by 7.2% YoY down from 11.3% YoY in September, heavily impacted by flooding in some regions. For the first ten months of 2025, retail sales grew by 9.3% YoY, which remained below pre-COVID levels of 10-12%. However, tourism was a bright spot as the number of international visitors recovered strongly 14% MoM and 22% YoY in October. Year-to-date, this number reached over 17.2 million, up 21.5% YoY and equivalent to 119% of pre-COVID level in 2019.
 

October saw headline CPI rising 0.2% MoM, primarily due to higher food and foodstuff prices (up 0.69% MoM) in response to short-term supply shortage as a result of flooding and continued uptick in education costs (up 0.51% MoM). However, on YoY basis, headline inflation increased 3.25% YoY in October, slower than 3.38% YoY in September. Thus, inflation averaged 3.27% YoY over the past ten months, still in check within the Government’s target range of 4.0% – 4.5% YoY for 2025.

The VND appreciated by 0.4% MoM against the USD in October and depreciated 3.3% YTD, supported by (i) the SBV reducing the reference rate and (ii) commitment of future currency sales (estimated volume of USD 1.5 bn). Meanwhile, there has been a sharp increase in USD demand in the grey market, reflecting linkages between the unofficial market and rising gold prices. The unofficial rate climbed to VND 27,800 per USD, while the interbank rate remained stable around VND 26,330, widening the gap between the two markets to 5.6%, marking a record high. 

The SBV raised the lending scale in the open market operation (OMO) in October as the interbank interest rates averaged 5% during the month, reflecting increasing short-term pressure on liquidity. The SBV injected VND 39.3 tn in the month and the outstanding reverse repo volume reached VND 224.3 tn, up 21% from the end of last month. The persistently high overnight rate reflects the SBV’s cautious stance in providing additional liquidity to the system. In the primary market, several commercial banks raised deposit rates by 10-30 bps in October, while promotional interest rates have been more common. We expect the trend to continue in the last quarter as credit growth tends to accelerate towards the year end. 

The stock market took a breather in October as the VN-Index corrected 1.3% to end the month at 1,640. The performance can be attributed to (i) profit taking pressure and (ii) persistent foreign net selling (USD 0.9bn) despite several positive news (i) FTSE Russell’s announcement on upgrading Vietnam to Secondary Emerging market status and (ii) US-Vietnam’s trade framework agreement on Oct 26. Liquidity slightly declined in October with average daily trading volume of nearly USD 1.4 bn (-2.1% MoM). In 10M25, ADTV still surged 36.8% YoY to USD 1.1 bn. The top foreign net sells in the month were MBB (-USD 116.7mn), SSI (-USD 116.4mn), and MSN (-USD 85.2mn). In contrast, the top foreign net buys were FPT (+USD 72.7mn), GEX (+USD 29.9mn), and VIC (+USD 26.3mn). 

From a sector perspective, the communication services, financials and materials were top underperforming sectors in the month. Meanwhile, the IT, industrials and real estate sectors held up better relative to the overall index. The financials sector, which holds the biggest weight in the VN-Index at 41.5%, saw sharp correction during the month given concerns over rising interest rates that might impact NIM and lower liquidity in the stock market. The IT sector had a good month thanks to price recovery of FPT (+10.4%) with newly signed contract value showing improvement since September. 

The VN-Index is currently trading at a trailing P/E ratio of 15.9x and forward P/E of 13.8x, below its average P/E ratio of 14.8x over the past three years. In November, the market might move in a range-bound trend to wait for more catalysts and balanced points. Several factors could lend support (i) robust macro data and (ii) numerous laws set for discussion and approval at the National Assembly meeting which might foster a more conductive business environment.