Vietnam Stocks Surge on US Trade Deal

Vietnam’s Stock Market Soars on US Trade Deal

The announcement of a US-Vietnam trade agreement, setting a 20% tariff on Vietnamese exports to the US and zero tariffs on US exports to Vietnam, has propelled the VN-Index to its highest level since April 2022, nearing the 1,400-point mark with a 0.3% rise on July 3, 2025. This deal, coupled with Vietnam’s aggressive push to upgrade its stock market to emerging market status, signals a transformative moment for the country’s financial markets. The agreement not only boosts Vietnam’s export-driven economy but also enhances its appeal as an investment destination, driving gains in key sectors like banking, consumer goods, and technology. However, the Vietnamese dong’s record low of 26,195 per dollar introduces risks that investors must navigate. This article delves into the implications of the trade deal and Vietnam’s market reforms, focusing on their impact on equities and currencies, while offering a nuanced perspective on the opportunities and challenges ahead.

The US-Vietnam Trade Deal

The newly minted US-Vietnam trade agreement has sparked a wave of optimism in Vietnam’s stock market, with the VN-Index climbing nearly 4 points to 1,390 on July 3, 2025, and trading volume on the Ho Chi Minh Stock Exchange (HoSE) exceeding VND 5,400 billion (approximately USD 212 million) by mid-morning. The deal, which reduces tariffs on Vietnamese goods from a potential 46% to 20% and eliminates tariffs on US exports to Vietnam, is a significant win for Vietnam’s export-driven economy, which relies heavily on sectors like textiles, electronics, and footwear. Stocks in banking, consumer goods, retail, and energy led the rally, with notable performers including Vinhomes (VHM), up VND 800 to VND 76,800 per share, Mobile World (MWG), up VND 1,100 to VND 65,900, and Masan (MSN), up VND 400 to VND 75,600. Securities stocks also surged, averaging a 4.3% increase, reflecting strong investor confidence in the market’s growth potential.

The trade deal’s impact extends beyond Vietnam, influencing global equities, particularly in the US, where the S&P 500 rose 0.5% to 6,227.42 and the Nasdaq Composite jumped nearly 1% to 20,393.13 on July 2, 2025. Companies with significant operations in Vietnam, such as Nike, which manufactures about half of its footwear there, saw a 4% gain in its stock price, underscoring the deal’s role in reducing supply chain costs. The agreement addresses concerns about transshipment, imposing a 40% tariff on goods routed through Vietnam, which could stabilize trade flows but may strain relations with other partners like China. While the deal enhances Vietnam’s competitiveness, the asymmetry in tariff structures—20% on Vietnamese exports versus zero on US exports—highlights a power imbalance that could limit Vietnam’s leverage in future negotiations.

Vietnam’s Stock Market Upgrade

Vietnam’s ambition to upgrade its stock market from frontier to emerging market status by September 2025 is a critical driver of its recent equity gains. The Ministry of Finance, under Deputy Minister Nguyen Duc Chi, has prioritized reforms to meet international standards, including improving information transparency, modernizing transaction and payment systems, and streamlining foreign investor access. The State Securities Commission (SSC) has introduced measures like Circular 68 on margin trading and amendments to depository and clearing regulations, aligning with the Korea Exchange (KRX) system operational since May 2025. These efforts aim to position Vietnam’s stock market as a key channel for medium- and long-term capital, reducing reliance on bank credit and attracting institutional investors.

The potential upgrade could unlock billions in foreign direct investment (FDI), as emerging market status typically draws larger global funds. However, challenges remain, including addressing foreign investor concerns about ownership ratios and clarifying the central clearing model. Hoang Van Thu, vice chairman of the SSC, emphasized that Decree 155 will amend foreign ownership regulations to signal Vietnam’s openness to global investors. While significant progress has been made, any delays in meeting international criteria could dampen market enthusiasm. The combination of the trade deal and these reforms positions Vietnam as a high-growth investment destination, but success hinges on sustained regulatory momentum and investor confidence.

The Double-Edged Sword of the Dong’s Depreciation

The Vietnamese dong’s decline to a record low of 26,195 per dollar following the trade deal introduces both opportunities and risks for financial markets. A weaker currency enhances the competitiveness of Vietnamese exports, particularly in sectors like manufacturing and consumer goods, by making goods cheaper for foreign buyers. This could bolster corporate earnings for export-oriented companies, supporting further equity gains. However, the depreciation increases import costs, which could fuel inflation and erode consumer purchasing power, potentially impacting domestic-focused firms like retailers and real estate companies.

The dong’s weakening also raises concerns about currency stability, especially for companies with foreign currency debts, as repayment costs rise. If the depreciation becomes too volatile, it could deter foreign investors, offsetting the benefits of the trade deal and market reforms. Analysts note that the dong’s decline may act as a buffer against the 20% US tariffs, but it also underscores Vietnam’s limited leverage in trade negotiations. For investors, the currency’s trajectory will be a critical factor, as prolonged depreciation could pressure corporate margins and overall market sentiment.

Impact on Other Asset Classes

The trade deal and Vietnam’s market reforms have limited direct impact on other asset classes like bonds, commodities, and cryptocurrencies, but some indirect effects are worth noting. In the bond market, Vietnam’s push for emerging market status could enhance the attractiveness of its sovereign and corporate bonds, as improved market infrastructure and transparency draw fixed-income investors. However, a weaker dong may increase yields on Vietnamese bonds to compensate for currency risk, potentially deterring some investors. In commodities, Vietnam’s role as a manufacturing hub could boost demand for raw materials like semiconductors and textiles, but global commodity prices are more influenced by broader factors like US monetary policy and Chinese demand.

Cryptocurrencies, while not directly tied to the trade deal, could see increased interest in Vietnam as a hedge against currency depreciation. However, Vietnam’s regulatory stance on digital assets remains cautious, limiting their immediate relevance. Real estate, represented by companies like Vinhomes, is likely to benefit from increased FDI and economic growth, but rising inflation from a weaker dong could pressure property demand. Overall, equities remain the primary asset class to watch, given their direct exposure to the trade deal and market reforms.

Regional and Global Market Context

The trade deal’s ripple effects extend to other Asian markets, with Taiwan’s stock index rising 1.1% to its highest level since March 2025, driven by technology and consumer cyclical stocks like Powertech Industrial (up 10%) and Nan Ya PCB Corporation (up over 9%). This suggests regional optimism about trade stability, as Vietnam’s deal could set a precedent for other export-driven economies. However, mixed performances in markets like Hong Kong (Hang Seng down 0.78%) and Japan (Nikkei 225 flat at 39,785.9) reflect broader uncertainties, including US economic concerns following a surprise drop in June 2025 private-sector employment.

Globally, the deal signals a potential shift toward targeted trade agreements, which could stabilize supply chains but also introduce new complexities. The 40% transshipment tariff could strain Vietnam’s relations with China, its largest trading partner, potentially leading to retaliatory measures that affect regional trade flows. Investors must weigh these geopolitical risks against the opportunities presented by Vietnam’s growing economic clout and market reforms.

Navigating Opportunities and Risks

The US-Vietnam trade deal and Vietnam’s stock market reforms mark a pivotal moment for the country’s financial markets, positioning it as a rising star among emerging economies. The VN-Index’s trajectory toward 1,500 points, as projected by Maybank Securities, reflects strong growth potential, particularly in sectors like banking, consumer goods, and technology. The prospect of achieving emerging market status by September 2025 could further amplify Vietnam’s appeal, drawing significant foreign capital and reducing reliance on traditional bank financing. Companies like Vinhomes, Mobile World, and Masan are well-positioned to capitalize on increased export opportunities and domestic growth.

For investors, the Vietnamese equity market offers compelling opportunities, but a strategic approach is essential. Focus on export-oriented sectors like technology and consumer goods, which are likely to benefit from the trade deal’s tariff reductions. Diversifying across sectors can mitigate risks from currency volatility and potential trade disputes. Monitoring Vietnam’s progress toward emerging market status is critical, as any delays could temper market gains. Additionally, investors should keep an eye on the Vietnamese dong’s trajectory, as prolonged depreciation could pressure corporate earnings and investor returns.

Looking ahead, the deal’s success depends on its implementation and Vietnam’s ability to navigate geopolitical challenges, particularly with China. The global trade landscape remains fluid, with US monetary policy and regional trade tensions adding uncertainty. Investors should adopt a long-term perspective, leveraging Vietnam’s favorable FDI environment and high-tech growth potential while remaining vigilant about currency and geopolitical risks. By balancing these factors, investors can position themselves to benefit from Vietnam’s emergence as a key player in global financial markets.

Shaun

Founder

With over a decade of expertise spanning investment advisory, investment banking analysis, oil trading, and financial advisory roles, RealisedGains is committed to empowering retail investors to achieve lasting financial well-being. By delivering meticulously curated investment insights and educational programs, RealisedGains equips individuals with the knowledge and tools to make sophisticated, informed financial decisions.

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Shaun

Co-Founder