Record fund outflows meet a corporate bond revival, reshaping Vietnam’s investment outlook

Global investors watching Vietnam are seeing a familiar late-cycle signal: equity funds are pulling back aggressively, while the corporate bond market is quietly re-opening. According to new data from FiinGroup, 2025 marked a year of defensive repositioning by professional investors—setting the stage for a potential capital rotation in 2026.

Vietnam’s investment funds recorded nearly VND 35 trillion in net outflows in 2025, the largest on record. This was not a flight from the market, but a deliberate response to elevated stock valuations and a year of strong gains. Fund managers increasingly locked in profits, raised cash levels toward the end of the year, and reshuffled portfolios—most visibly within the banking sector, which remains the backbone of Vietnam’s financial system.

The shift in fund behavior reflects growing caution rather than pessimism. By December, many large funds were holding higher cash buffers, signaling a wait-and-see stance amid global uncertainty, tighter financial conditions, and concerns over valuation sustainability. For international allocators, this mirrors patterns seen in other emerging markets when equities move ahead of fundamentals.

While equity funds stepped back, Vietnam’s corporate bond market told a different story. Bond issuance rebounded sharply in 2025, driven primarily by banks and private placement channels. Early bond buybacks hit record levels, helping restore confidence, while secondary market liquidity improved significantly—an important signal after several turbulent years for local credit markets.

However, risk has not disappeared; it has merely shifted forward. FiinGroup estimates that corporate bond repayment obligations—including principal and interest—will reach approximately VND 324 trillion in 2026, up more than 28% year-on-year. This looming maturity wall means credit quality, issuer transparency, and refinancing capacity will be decisive factors for both domestic and foreign investors.

Looking ahead, Vietnam’s corporate bond issuance is projected to reach around VND 800 trillion in 2026, a 24% annual increase. Banks and real estate developers are expected to remain dominant, but the anticipated return of infrastructure and energy issuers points to broader capital formation tied to long-term growth themes, from urbanization to energy transition.

The bigger takeaway for global readers is not about short-term flows, but structure. Vietnam appears to be entering a phase where capital becomes more selective, more credit-driven, and more sensitive to balance-sheet strength. The key question for 2026 is whether this bond-led recovery will stabilize the financial system—or quietly redraw where smart money chooses to take risk in Southeast Asia.

Related

Source: Vietnam Insider

HCMC’s gross domestic product (GDP) in the first quarter of 2023 has grown by 0.7%, the lowest among Vietnam’s five centrally-governed cities, according to the General Statistics Office. Mr. Michele D’Ercole, the President of the Italian Chamber of Commerce in Vietnam (ICHAM) advised some solutions for HCMC’s economic recovery in an executive interview.

Vietnam’s GDP growth in H1/2023. Source: GSO

HCMC recorded lower-than-expected gross regional domestic product (GRDP) growth in the first quarter of 2023, the lowest since 1982. What is the main reason for this weak growth from your point of view?

The main reasons for HCMC’s low growth rate is the global economic recession and inflation have affected all economic sectors, hindering recovery such as inflation, bank liquidity, cash flow, exchange rates, interest rates and the real estate market.

The economic growth rate of HCMC has been influenced from external factors that the city government cannot control directly. It is normal that the most developed areas of a country grow less, after reaching certain standards, but, as HCMC is perceived abroad as the showcase of Vietnam’s development, this is not a good message.

The “blazing furnace” policy implemented by the central government has also had a two-faceted impact: on the one side, it had the effect of stopping a number of initiatives, but on the other it was a well-deserved clean-up.  

Is it the domino effect from the macroeconomic factors that causes the negative growth in logistics, real estate and healthcare industries in HCMC? 

The real estate, stock and bond markets are all facing obstacles this year amid tightening monetary policy. A number of enterprises have also reported a lack of export orders due to weak global demand. So yes, all these facts impact on logistics sector and healthcare industries. Like in other fast developing economies, domestic consumption and development are not keeping up with the pace of industrial output. Therefore, with little purchase power internally and lower order from abroad, these industries suffer.

What should the HCMC government do to promote the strength of the business and the entrepreneurs to improve the economic growth during this period?

I think the HCMC government is to promote the strength of the business and the entrepreneurs to improve the economic growth during this period. The economy will need to be supplied with capital amid the tight monetary policy. For example, it was implementing a program to link up lenders and firms to provide the latter with loans. 

However, it is not really a matter of “promoting”, but rather of implementing the right policies for a long-term and sustainable growth of the city for the benefit of all. On top of emergency measures to help those in real need.

Mr. Michele D’Ercole, the President of the Italian Chamber of Commerce in Vietnam (ICHAM)

Is it time to promote the public investment also?

A slowdown is an excellent time to rethink strategic matters, such as transportation (traffic management, alternative means of mass transportation), connectivity (digital, naval and airborne), services (digitalization of the public administration, centralization of public services), training (requalification of people to skill up for higher-demand jobs, other educational programs etc.), fight against pollution (building / upgrading modern and efficient infrastructures such as sewages, building of charging stations and eco-friendly construction materials factories, etc.).

One of the most important tasks is speeding up its public spending. Secondly the city should incentivize investments that generate long-term returns for the city,  through tax holidays and simplified procedures.

For groups of industries that are experiencing negative growth, what specific actions should the city take to revive the growth?

I think the Government can step up measures to address the problems such as supporting businesses to access capital. And also taking the advantage of tourism opening to attract more international visitors to Việt Nam, especially HCMC. 

Thank you.

Related

Source: Vietnam Insider

Vietnamese stocks are some of the world’s most battered this year, but market watchers are backing a turnaround.

They’re pointing to valuations that haven’t been this cheap since 2017 and an economy that’s been growing 5% or more each year for two decades. The nation’s benchmark gauge has almost completely erased its 2019 returns and now trades at about 12 times estimated earnings over the next year.

Concerns about trade and supply-chain disruptions due to the coronavirus have already wiped off more than 6% from the VN Index this year. With China delaying the reopening of land borders and travel restrictions, Vietnam expects industries related to tourism, agriculture, textiles and machinery to be hit hard. But analysts so far have remained positive, projecting that the nation’s companies will manage to post record earnings.

“Vietnam is still one of my favorite countries in terms of growth prospects, valuations and dividend yield,” said Federico Parenti, a fund manager at Sempione Sim SpA in Milan. “I will surely add more shares once it will be more clear how the situation will evolve.”

The VN Index fell 0.2% as of 1:41 p.m. in Hanoi Tuesday after closing at its lowest level in more than a year.

Many acknowledge earnings for the quarter ending in March will take a hit as visas for Chinese tourists — which account for about a third of the total arrivals — got halted, while meetings and festivals were canceled to avoid the spread of the virus.

Even though foreigners have pulled $5.3 million from Vietnamese equity funds this year, that’s much less than the outflows from peers such as Thailand, Indonesia or the Philippines. And while the Vietnamese equity index is still 25% below its 2018 peak, it’s proved to be resilient in the long run. Since 2012, it has rallied every year except one.

The recent sell-off is presenting “interesting value opportunities” in transport, energy and consumption, said Andrew Brudenell, the manager of a frontier-markets fund for Ashmore Group Plc. Ruchir Desai, a fund manager at Asia Frontier Capital Ltd., also likes travel-related stocks.

Vietnam remains one of the fastest growing economies in Asia, with an expansion rate of 7% for 2019, according to official data. While the government said it may slow to under 6% in 2020, that still places Vietnam above most countries. Investors also see the market as one of the biggest beneficiaries of a shift in supply chains away from China.

Vietnam Asset Management expects the ratification earlier this month of a free-trade agreement with the European Union to also have a “significantly positive” impact on the nation’s economy. Ngo The Trieu, chief investment officer of Eastspring Investments in Vietnam, says the revision of the country’s securities law and launch of new indexes will further grow the nation’s equity market.

“Sectors that directly capture the growth drivers of the domestic economy” will generate value for long-term investors, he said.

Reporting by By Nguyen Kieu Giang and Ishika Mookerjee @ Bloomberg