Careful selection, policy tracking, and risk assessment will be key to capturing the emerging cycle

The Return of Capital Flows

In Q1 2025, the corporate bond market experienced a significant decline due to a sharp drop in private placements. In contrast, public offerings surged, reaching VND 23.13 trillion—up 68% year-on-year—thanks to contributions from banks and securities companies.

Within just the first three months of the year, securities firms made notable breakthroughs in bond issuance value, significantly contributing to total market issuance. Noteworthy issuances included VPS Securities (VND 5,000 billion) and Rong Viet Securities (VND 500 billion). According to Mr. Truong Hien Phuong, Senior Director at KIS Vietnam Securities, investment funds ranging from tens of millions to USD 1–2 billion are increasingly entering the market. If Vietnam is upgraded to emerging market status, even larger funds could flow in, potentially pushing total capital inflows into the stock market beyond USD 10 billion in the coming years.

This shift will likely boost domestic investors' demand for margin lending and require securities firms to enhance their capacity to underwrite for foreign investors under new mechanisms such as non-prefunding. In this context, bond issuance becomes a rational and necessary choice to expand funding sources.

This explains why securities companies saw a surge in bond issuance in the first quarter, not only meeting short-term capital needs but also laying the groundwork for the next market growth cycle.

By April 2025, the market showed strong recovery, with total bond issuance reaching VND 46.9 trillion, up 138% year-on-year. Private placements accounted for nearly 90% of this total. The real estate sector made a strong comeback with three private placements totaling VND 10 trillion, including two issuances from Vingroup worth VND 7 trillion.

“The push by real estate firms to issue bonds indicates they have new projects lined up. After recent difficulties, these companies have learned valuable lessons and are now returning with more substantive development plans,” Mr. Phuong commented.

However, he also cautioned that Q3 2025 will see a large volume of real estate bonds maturing, creating significant repayment pressure. Companies must use raised funds appropriately—for business operations and project development, rather than financial speculation or short-term debt rollover.

This wave of bond capital signals a broader trend: Vietnam’s capital market, after a period of sharp correction, is preparing to enter a new growth phase. Enterprises are being supported by public investment initiatives and new projects backed by low interest rates from the State Bank of Vietnam.

Coupled with the expectation of a market upgrade, this could trigger strong international capital inflows, revitalizing the stock market. Experts also forecast a major shift from safe-haven assets like gold to financial assets, including corporate bonds. If no negative shocks occur, the VN-Index could fluctuate between 1,300 and 1,400 points in the near term and potentially climb to 1,400–1,500 points upon an upgrade.

Recommendations for Investors

As the market gradually enters a new growth cycle, major securities firms are proactively strengthening their resources to get ahead of the wave. A representative from KIS Vietnam shared that the company is enhancing training, mobilizing internal capital from its Korean parent company, and upgrading its entire IT infrastructure to prepare for a potential boom.

For investors, opportunities are opening up, but caution is still needed. The return of bonds does not mean the market has fully normalized. Instead, careful selection based on issuer credibility, clear use of proceeds, and especially repayment capacity is essential.

Institutional investors should consider shifting assets from safe havens to growth assets and closely monitor policy developments related to tax cuts and securities settlement.

Mr. Phuong also expressed hope that the capital market will receive further support through deeper regulatory reforms, such as shortening the securities settlement cycle to T1 or T0, introducing day trading products, and diversifying investment fund types.

Efforts should also focus on attracting large global funds and diversifying fund structures. While Vietnam currently has closed-end funds, open-end funds, and ETFs, segments like pension funds—offering large and stable capital—remain underdeveloped. Additionally, financially sound corporations should be encouraged to issue high-quality financial products to enhance market appeal.

“The Q1 surge in bond issuances by securities firms and the return of real estate bonds in April are positive indicators of a market on the move. However, that doesn’t mean risks have disappeared. Close monitoring remains necessary, especially regarding fund usage and issuers’ repayment ability.

For investors, now is a prime time to restructure portfolios, prioritizing transparent products with long-term growth potential. Careful selection, policy tracking, and risk assessment will be key to capturing the emerging cycle,” the expert advised.