Asset allocation: diversify stocks and gold to fully capitalize on Vietnam's growth cycle

Against the backdrop of Vietnam entering a new growth cycle and targeting two-digit growth, a long-term asset allocation strategy will be a key factor enabling investors to fully capitalize on the economy’s growth opportunities over the next 5–10 years.

In a positive macro context, FTSE Russell has confirmed the upgrade trajectory to a secondary emerging market status in September 2026, which has generated positive expectations for the near future. However, external factors such as Middle East tensions and tariff/trade-related developments could have some impact on Vietnam.

FTSE Russell upgrade and implications for capital inflows

In a recent discussion on the Phố Tài chính talk show, Hoang Viet Anh, CEO of LPBank Securities Joint Stock Company (LPBS), said Vietnam’s upgrade by FTSE Russell is the first milestone in a longer process to further integrate the capital market into the global financial system.

He noted that being upgraded to an emerging market is viewed as the first step in a new growth cycle. Over time, Vietnam is expected to move beyond reliance on passive index funds from FTSE and, further ahead, target MSCI and other emerging market standards, expanding the scale of international capital flowing into Vietnam.

Foreign capital currently accounts for about 12–14% of Vietnam’s stock market size. In regional emerging markets such as Thailand, Indonesia, the Philippines, or Malaysia, the ratio can reach 20–40%, indicating potential for Vietnam to attract more foreign capital over the next 5–10 years as market barriers continue to improve for both passive and active funds.

Debt market upgrade tied to Investment Grade outlook

Beyond equities, another important pillar is the debt capital market, particularly government bonds, linked to the narrative of an upgrade of Vietnam’s national credit rating to Investment Grade in the near future.

Vietnam is currently near Investment Grade (BB+). When upgraded to BBB-, it would be a major turning point, unlocking access to capital from large global funds such as pension funds, insurers, and Investment Grade funds.

Hoang Viet Anh said the upgrade could reduce the cost of capital significantly, by about 100–150 basis points (around 1–1.5%). This would help the government and Vietnamese enterprises reduce borrowing costs when accessing international markets.

Foreign holdings of Vietnamese government bonds remain below 5%, while in many regional peers this figure can reach 20–30%. The gap suggests room to broaden international capital into Vietnam’s bond market. He cited experience from Thailand and India, where stronger foreign participation in the debt market coincided with foreign exchange reserves rising by 50–100%, supporting macroeconomic stability and monetary policy.

New market segments and expansion of asset channels

Hoang Viet Anh also highlighted Vietnam’s development of new market components, including an international financial center, a carbon credits exchange, a market for startup enterprises, and a digital asset market—described as aligning with major global trends.

He pointed to the global carbon market, which totals about $500–800 billion per year and could rise to $3–4 trillion by 2030, supported by the Net Zero transition. Vietnam’s plan to implement a carbon trading exchange is framed as a timely move to capture global green capital.

At the same time, the digital asset market is described as becoming a major trend, with many countries and central banks researching and testing it.

Data points, growth targets, and valuation outlook

Vietnam targets GDP growth of about 8–10% per year over the next decade. With this foundation, corporate earnings growth of 10–15% per year is described as feasible.

As the market is upgraded to an emerging market, valuations could expand from around 11–12x P/E to about 14–15x, creating additional upside for the stock market.

Impact and investment approach

To absorb international capital effectively, the domestic market must continue to diversify the supply of corporate offerings. In the next five years, a wave of IPOs may emerge in sectors such as industry, infrastructure, retail, and finance.

For investors, the article emphasizes the need for a holistic and long-term asset allocation strategy to leverage growth opportunities in the new economic era. It also notes that markets are cyclical and that concentrating too heavily on a single asset can increase the risk of losses when conditions reverse.

Accordingly, diversified portfolios across equities, bonds, gold, and new assets such as crypto are described as crucial for balancing growth and risk over the long term.