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Market Insights September 2026

Production and Exports Keep Accelerating, While the Trade Deficit Widens and Consumption Stays Cautious

IN BRIEF

• Production, exports, and investment continued to accelerate. The August Index of Industrial Production (IIP) rose 14.41% YoY (8M: +11.92%, hitting a multi-year high), led by manufacturing (+12.48%), while exports reached USD 54.8bn (+26.0% YoY) driven by the electronics sector (+56% YoY). Public investment disbursement reached VND 509.5tn in 8M (49.8% of the annual target, +24.5% YoY); realized FDI grew ~12% YoY, while newly registered and added FDI surged 55.4% YoY.

• Trade deficit pressures eased significantly. August imports slowed to USD 54.9bn (+37.9% YoY, but -3.1% MoM), substantially narrowing the trade deficit to just USD 113mn for the month. Import breakdown continues to reflect strong domestic production demand, with high growth in electronics (+80% YoY), petroleum (+150% YoY), and ores/minerals (+109% YoY).

• Inflation pressures mounted, while the stock market rebounded amidst cautious liquidity. August CPI rose 0.47% MoM (+4.89% YoY) driven by energy prices, bringing the 8M average CPI to 4.45% and approaching the government's 4.5% target. Money market liquidity remained abundant with the overnight interbank rate hovering around 2% and the USD/VND exchange rate cooling down by ~VND 200. The VN-Index rebounded +5.6% MoM to 1,832.12 points (+2.7% YTD), though average daily order-matching liquidity declined to VND 14.2tn/session and foreign investors maintained net selling of VND 1.6tn (albeit with significantly reduced selling pressure)

Industrial production sustained its strongest momentum in years. In August, the index of industrial production (IIP) rose 14.41% YoY. Over the first eight months, IIP grew 11.92% YoY, the fastest pace in many years. Growth continued to be led by manufacturing and processing, where output expanded 12.48% in the eight-month period. Several key manufacturing sectors posted double-digit growth, including metals (+22.37%), beverages (+16.36%), motor vehicles (+15.86%), electrical equipment (+14.56%) and electronic products (+13.91%). These sectors are closely integrated into global supply chains and their performance reflects improving external demand. Mining also rose 8.09% over eight months while electricity production and distribution grew 10.13%, both markedly higher than at the start of the year. This suggests domestic production is broadening out rather than concentrating in a handful of key export sectors.

International trade maintained positive momentum in August. Exports reached USD 54.8 billion, up 26.0% YoY, while imports reached USD 54.9 billion, up 37.9%. Electronics remained a key growth driver, rising 56% YoY in August. Exports of phones and components rose 24%, reflecting sustained global demand for technology products and continued investment in artificial intelligence (AI) infrastructure. Several basic industrial goods also recorded solid growth. Iron and steel exports surged 98% YoY in August, lifting eight-month cumulative growth to 16%. Energy and chemicals performed strongly as well, with refined petroleum exports up 98% and chemicals up 88%. In agriculture, key commodities held their positive position, with fruit and vegetable exports up 45% and coffee up 24%YoY.

Imports moderated but still point to strong production demand. After rising sharply since the start of the year to build up raw materials and inventories, import activity showed signs of slowing in August. Import value fell 3.1% MoM, narrowing the trade deficit to just USD 113 million. However, the import mix continues to indicate robust domestic production demand. Electronics imports rose 80% YoY. Several raw material and energy items also posted strong growth, including refined petroleum (+150%), crude oil (+26%), coal (+91%) and ores and other minerals (+109%). This indicates the manufacturing sector remains in a capacity expansion phase and reflects the economy's rising energy needs.

Investment activity maintained a positive trend and continued to play an important role in supporting economic growth. Public investment disbursement re-accelerated after slowing in July, with cumulative eight month disbursement reaching VND 509.5 trillion, equivalent to 49.8% of the plan assigned by the Prime Minister and up 24.5% YoY. Foreign direct investment also continued to deliver favourable results: realised FDI rose about 12%in the first eight months, while newly registered and additional FDI capital surged 55.4%.

CPI moved close to the full-year target. After easing in July, inflation picked up again in August on international energy prices, particularly the sharp rise in global oil prices as geopolitical tensions in the Middle East escalated once more. CPI rose 0.47% MoM and 4.89% YoY in August. Average inflation over eight months reached 4.45%, close to the Government's 4.5% inflation control target. Inflation risk is not confined to Vietnam but is a global concern. Rising inflation expectations have triggered heavy selling of government bonds across many economies, pushing yields to multi-year highs and increasing the risk that international interest rates stay higher for longer than expected.

Consumption improved but has yet to break out. Cumulative eight-month retail sales rose about 13.3% YoY. Stripping out price effects, real growth was around 7.6%. Although consumption continues to recover versus the same period last year, the pace of improvement remains well below that of manufacturing and exports. This suggests the economy's growth momentum still depends more on export-oriented production than on domestic demand.

Money Market: Bank liquidity improves, exchange rate cools in August. Liquidity conditions in the money market continued to improve in August despite credit demand remaining high. Many commercial banks raised deposit rates to attract funding from the household sector, lifting VND deposit growth to 8.77% as of 22 August, ahead of VND credit growth of 8.38%. System-wide liquidity was more abundant, reflected in the overnight interbank rate declining through the month to around 2%. Against this backdrop, the State Bank of Vietnam gradually scaled back liquidity support through open market operations (OMO), with net withdrawal of about VND 16.6trillion during the month. Short-term liquidity pressure in the system has therefore eased considerably versus prior months.

Another notable development was the marked cooling of the USD/VND exchange rate. The rate fell by about VND 200, or 0.76%, from end-July, reflecting reduced foreign currency hoarding and a more balanced supply-demand position. Healthy foreign currency inflows from exports and FDI continued to provide important support for the exchange rate.

Stock Market: Vietnam's stock market rebounded firmly in August after the sharp correction in July. The VN-Index closed the month at 1,832.12 points, up 5.6% MoM, recovering most of July's 6.7% decline and bringing the year-to-date return back to around +2.7%. The VN30 rose 5.9% and the VNMID 5.4%, indicating the recovery remained concentrated in large caps. Liquidity, however, did not improve commensurately: average matched value on HOSE was only VND 14.2 trillion per session, down 2.2% MoM and 30% below the five-month average.

By sector, real estate and banks continued to lead, contributing 48.7 points and 36.6 points respectively to the VN-Index gain, or nearly 90% of the market's total advance. VIC, VHM and VRE stood out among real estate names, while TCB, VPB, MBB and HDB led the banks. Cash flow was nonetheless unconvincing, with trading value in banks down 22.3% MoM and financial services down 33.5%,while real estate was one of the few sectors to see both prices and liquidity improve.

Overall, August showed improving sentiment but not enough to confirm a sustained uptrend. Foreign investors remained net sellers of about VND 1.6 trillion, though pressure eased significantly and flows turned to net buying after the FTSE announcement on 21 August, concentrated in FPT, TCB and VIC. Decision 40/2026/QD-TTg on restructuring state capital at enterprises, together with expectations of an FTSE Russell upgrade, also supported sentiment. On valuation, the VN-Index ended the month at a trailing P/E of about 12.55x, well below the 10-year average of around 15.3x. Valuation therefore still supports selective accumulation, but a medium-term uptrend requires further confirmation from liquidity, breadth and foreign flows.