Fund inflows help stabilize Vietnam's stock market: analyst

As fund inflows are typically long-term investments, they play a key role in stabilizing Vietnam's stock market and preventing sharp fluctuations, according to Nguyen Duy Anh, Chartered Financial Analyst (CFA) at Vietcombank Fund Management Co., Ltd. (VCBF).

Anh noted that the fund market is gradually attracting more attention from investors. By the end of Q3/2024, Vietnam had 117 investment funds. Compared to 2019, the number of open-end funds doubled, member funds tripled, and ETF funds increased eightfold.

This indicates a clear shift in investment trends among Vietnamese investors, who are increasingly opting for more professional and efficient investment channels.

Not only has the number of funds grown, but the size of assets under management has also recorded significant rises. In 2024 alone, the size of open-end funds more than doubled, reaching nearly VND53 trillion (approximately $2.07 billion).

During the recent “Pho Tai Chinh” (Financial Street) talkshow, Anh commented that in the past 2-3 years, more individual investors have been directing their funds into investment vehicles like open-end funds.

For instance, at VCBF, fund inflows last year were twice as high as the previous year. In the early months of 2025, inflows have already increased by 2-3 times compared to the same period last year.

"Since funds typically involve long-term investments, they contribute to market stability and help prevent sharp market fluctuations. In contrast, when individual investors pump cash into the market quickly, it leads to more volatility," he said.

The fund market is gradually gaining more attention due to its professionalism, transparency, and potential for sustainable returns. Many experts believed that investors are beginning to recognize that this is not just another simple investment channel. Rather, it is managed by experienced professionals who understand the market and apply scientific risk management tools to optimize profits.

A random survey of 100 investors at InvestingPro in early March 2025 revealed that over 30% of respondents were new to financial investment. Many of these investors are young individuals still in school or early in their careers, with no prior experience in bank savings. This trend reflects the growing financial maturity of the younger generation and signals a broader shift in how people approach investment.

Vietnam’s stock market outlook for 2025

The growth of Vietnam’s stock market in the first quarter of 2025 took many investors by surprise. Most analysts from securities firms had predicted a slow start to the year, with a more dynamic market in the latter half.

Anh attributed the positive performance of the stock market in the early part of the year to factors such as better-than-expected corporate results and favorable interest rate conditions.

Earlier, experts had anticipated that interest rates could rise in 2025, but recent government signals suggest that interest rates will remain stable this year, with the possibility of a reduction in certain industries.

“Vietnam’s economy is expected to grow strongly. In the new era, as Vietnam rises, so will its stock market,” said Anh.

He believed that Vietnam’s stock market will eventually align with regional valuation levels. Currently, its valuation is relatively low compared to other countries in the region. The P/E ratio, assuming an 18-20% growth rate in 2025, is only about 12 times.

Additionally, foreign investors have been net sellers since last year. However, unlike 3-4 years ago, when heavy foreign net selling would have caused the market to drop by 15-20%, the market’s sideways movement now indicates that domestic capital is strong.

With prospects for a market upgrade and the early launch of the new trading system KRX, foreign capital may return. Combined with strong domestic capital, the outlook for investing in Vietnam’s stock market over the next 2-3 years is very positive.

Anh held that as the economy and corporate profits grow, nearly all industries will benefit. However, he emphasized that investors should not just focus on which sectors will benefit but also consider which stocks have the greatest growth potential in the broader market. In fact, even during challenging times, some companies manage to rise and become industry giants.

For individual investors, Anh recommended diversifying investments. Given that the market will always experience fluctuations, it is crucial to allocate assets wisely.

For investors seeking returns from the stock market but lacking the time to manage their investments, Anh suggested considering open-end fund certificates, noting these funds offer various portfolios and investment strategies to suit different needs.

In a report, Dr. Can Van Luc, chief economist at BIDV bank and head of the BIDV Training and Research Institute, and his team advised individual investors with limited financial knowledge or investment experience to consider using institutional investors like investment funds.

This recommendation is based on the fact that most funds performed positively in 2024, and the strong outlook for the stock market in 2025 suggests that this trend will continue.