Recently, the Vietnamese stock market has experienced a steep upward trajectory, drawing increased attention from domestic individual investors. While the KOSPI has entered a sideways trend this month and lost momentum, the Vietnamese stock market has continued its record-breaking streak, taking the title of 'Highest Year-to-Date Return' from the KOSPI.

The Vietnamese stock market continued its record-breaking streak, claiming the title of 'Highest Year-to-Date Return.' Photo by Getty Images

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According to the financial investment industry on August 29, the VN30 Index closed at 1,865.83 the previous day, up 0.93%. Its year-to-date return reached 37.76%, surpassing the KOSPI's 33.21% and ranking first among global indices. The VN30 Index is composed of 30 leading blue-chip stocks listed on the Ho Chi Minh Stock Exchange (HOSE). The KOSPI had been leading major global stock markets in terms of growth rate as of July 31, when it hit a 52-week high. However, as the market entered a prolonged sideways phase this month, it lost its top spot to Vietnam.

The strong performance of the VN30 Index has also brought considerable profits to so-called 'Vietnamese ants'-individual investors in Vietnam's stock market. The monthly (August 1-26) Vietnamese stock holdings of domestic individual investors reached approximately $301 million (about 418.8 billion won), marking a fourth consecutive month of growth since April. This is the highest figure since August last year, when it reached $302.56 million. In Korea, from August 1 to 28, individual investors purchased about 4.1 billion won worth of ACE Vietnam VN30 (Synthetic) Exchange-Traded Fund (ETF), turning net buyers for the first time in four months. This ETF has surged more than 25% in price since the beginning of the year.

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NH-Amundi Asset Management explained, "Market expectations are rising due to a high GDP growth rate in the 7% range and a consumer price index (CPI) forecast below 4%." The company added, "Vietnam has become the first Asian country to sign a tariff agreement with the United States, which has resolved external risks and highlighted the attractiveness of the stock market." The Vietnamese government is also pushing to adopt International Financial Reporting Standards (IFRS) to enhance corporate information transparency, and has increased infrastructure spending in the first half of this year by 40% compared to the previous year, providing strong support for the market.

In the second half of this year, a major positive catalyst is also expected: inclusion in the FTSE Emerging Markets Index. Vietnam has been on FTSE's watch list for emerging markets since 2018, but multiple upgrades were delayed due to institutional shortcomings. However, with the Korea Exchange (KRX) introducing a next-generation securities system in May, along with improvements such as shorter settlement cycles and simplified account opening for foreign investors, most of the technical requirements for an upgrade are now considered to be in place.

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Kim Geuna, a researcher at Hana Securities, stated, "The market sees a high possibility of Vietnam's upgrade in the regular review in the second half of the year, and this is the most decisive factor driving the current stock market rally." She added, "There is a high likelihood that the short-term upward momentum will continue through September and October, when expectations for an upgrade become more concrete." However, she also cautioned, "Given that the index has surged sharply in a short period, investors should be mindful of possible corrections. Even if the upgrade goes through, if the real economy does not support it, the potential for further gains may be limited, so caution is warranted."