FTSE Upgrade Boosts Vietnam Economy, Lumen Vietnam Fund Highlights Market Changes

Key pointsFTSE Russell has decided to upgrade Vietnam to the Secondary Emerging Market category, with implementation starting in September 2026. Following this upgrade, Lumen Vietnam Fund is evaluating improvements in market liquidity and expects a favorable short-term investment environment. An increase in foreign investor capital inflow is anticipated, which is believed to positively impact the overall Vietnamese economy.
Business impactFor Japanese companies, the upgrade in the capital market may lead to an improved fundraising environment, which manufacturing firms can leverage as a basis for additional investments. It is essential to monitor future trends in capital inflows.

Key pointsThe U.S. Federal Reserve (FRB) has decided to raise interest rates for the first time in three years. This raises concerns about depreciation pressure on the Vietnamese dong and changes in capital flows. The movements of foreign investors are particularly noteworthy, as they may also affect the Vietnamese stock market.
Business impactFor Japanese companies, the rise in U.S. interest rates could impact export competitiveness, while also increasing the cost of importing raw materials. Managing foreign exchange risk will be a key challenge moving forward.

Key pointsForeign capital inflow continues in the Vietnamese stock market, driven by expectations of an FTSE market upgrade. This may serve as a buffer against external headwinds such as the U.S. Federal Reserve's interest rate hike forecasts. The sustainability of this capital inflow is a key focus for the future of the Vietnamese economy.
Business impactFor Japanese companies, the expansion of foreign capital inflow could lead to improvements in the funding environment and stock valuations. In particular, benefits are expected in the manufacturing supply chain due to domestic demand growth and the maturation of capital markets.

Key pointsIn Hai Phong, CTCP Đầu tư Cảng Lạch Huyện announced a plan to invest 45 trillion VND in the construction of four ports. The project is divided into two phases, with the construction of berths 9 and 10 scheduled for completion by 2030, and berths 11 and 12 planned for 2031 to 2035. The company is proceeding with procedures to start construction within 2026.
Business impactThis large-scale infrastructure investment presents new business opportunities for related Japanese companies, particularly in the construction and logistics sectors.

Key pointsThe Bank of Japan will hold a monetary policy meeting on September 17-18, and there are concerns that failure to meet market expectations could lead to further depreciation of the yen. A weaker yen may affect Vietnamese export companies and transactions with Japan, potentially impacting the dong exchange rate and foreign investor capital flows. This is particularly significant for Japanese investors as yen capital flows are linked to investment flows into Southeast Asia.
Business impactIf the yen depreciates, the cost of remittances from Japan to Vietnamese subsidiaries may increase, and there could be impacts on foreign exchange gains and losses when converting dividends to yen. The complexity of yen-denominated procurement and labor costs may necessitate a review of investment plans, especially affecting the manufacturing and logistics sectors.

Key pointsThe Federal Reserve (Fed) is likely to decide on a rate hike on September 15 and 16, with over 90% probability of a 0.25-point increase. If implemented, this would be the first rate hike in over three years. In Vietnam, short-term impacts are expected to be minimal, but the USD rate hike may exert pressure on the VND. Additionally, the Bank of Japan's policies are also under scrutiny, as both countries' monetary policies could affect international liquidity.
Business impactFor Japanese companies, the Fed's rate hike may narrow the interest rate differential between the VND and USD, potentially limiting the flexibility of Vietnam's monetary policy. Sectors sensitive to funding and exchange rate risks should closely monitor future developments.

Key pointsIn HCMC, the urban development law is providing new investment opportunities for parking facilities. Notably, land rental fees for parking lots will be waived, allowing up to 25% of the area to be used for services. This makes it easier for investors to advance parking development.
Business impactFor Japanese companies, parking development in HCMC presents new business opportunities. As there is a growing demand for multifunctional parking and expanded services, a reassessment of investment strategies is necessary.