Commenting on the macroeconomic outlook and stock market developments at the present time, Mr. Tran Anh Tuan, CFA, Director of the Analysis Center, Petroleum Securities Joint Stock Company (PSI), opined that the decision to maintain the base interest rate at 4.25-4.50% at the meeting on May 7, 2025, instead of a cut as previously expected, reflected the Fed’s cautious stance amid uncertainties surrounding tariff policies and concerns about potential inflationary pressures and a resilient labor market.
In fact, US inflation eased in April to its lowest level since February 2021, falling to just 2.3%, but many economists concur that inflation could pick up again from May onwards due to tariff-related pressures.
Meanwhile, the labor market remains robust, with 177,000 new jobs added in April and an unchanged unemployment rate of 4.1%. Nonetheless, there are signs of weakening in US manufacturing as producers worry about the risk of tariffs, which could negatively affect the labor market in the near future. Additionally, maintaining the interest rate gives the Fed leeway to react to unpredictable fluctuations and mitigate negative impacts arising from the Trump administration’s protectionist policies.
The US government’s abrupt tariff policies have caused concern among investors, leading to outflows from the US market. These factors, coupled with geopolitical risks, have prompted a flow of money into safe-haven assets such as gold, JPY, and EUR…
In line with the positive developments in the broader market, foreign investors unexpectedly returned to strong net buying during the trading sessions in the first week of May, with a total net buying value of more than VND 1,210 billion. Since the beginning of 2025, the total net selling value of foreign investors has been approximately VND 42,000 billion, equivalent to over USD 1.6 billion.
Although foreign capital outflows have been persistent, new factors are emerging and are expected to enhance the attractiveness of the Vietnamese stock market in the eyes of international investors.
Firstly, a stable macroeconomic environment continues to be an important foundation. GDP growth in the first quarter of 2025 was robust at 6.93%, the highest in five years. Despite the high tariffs that the US plans to impose on Vietnamese goods, economic organizations still forecast that Vietnam’s GDP growth could reach 6.5%-7% in 2025. This projected growth rate, although lower than the National Assembly’s target, remains high compared to the region and the world.
The factors supporting Vietnam’s growth mainly stem from internal strengths, including the State Bank’s effective management of inflation and exchange rates in recent years. Additionally, public investment and a recovery in the real estate sector will also be crucial drivers of GDP growth this year as trade tensions escalate.
Moreover, the new KRX information technology system has been officially operational since May 5, 2025. This is expected to be a significant technical boost, bringing the Vietnamese market closer to international standards, enhancing transparency, and improving trading efficiency. As a result, the prospects for an upgrade in market status are clearer than ever.
PSI predicts that Vietnam is likely to be upgraded to emerging market status by FTSE Russell in their September 2025 review. This is expected to attract approximately $6 billion in passive funds from ETFs and index-tracking investors.
The Vietnamese market has recovered positively from the shock of the US government’s tariff policies, but much of this recovery has been driven by large-cap stocks, particularly real estate and banking stocks.
Despite the positive short-term reaction, a cautious portfolio management approach is warranted given the uncertain direction of foreign capital flows. In the near term, the Vietnamese stock market may experience significant fluctuations as the risks stemming from tariff policies remain highly unpredictable in terms of scale, timing, and breadth.
Although there has been a return of money to the stock market in recent weeks, the degree of differentiation is increasing, and investors’ cautious sentiment persists, making it challenging for the market index to sustain a strong upward trend at present.
“I expect that the positive factors from the macro economy, along with infrastructure reform policies, the potential for an upgrade, and other factors will provide a stronger foundation for the Vietnamese stock market to enter a new era of growth,” Mr. Tuan emphasized. “Consequently, the inflows into the market will be more strategic and sustainable.”
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