“Strong capital inflows and unsterilised reserve accumulation have led to a build-up in liquidity in the banking system. As evidence, five-year domestic government bond yields have declined by about 150bp since the end of 2017 to around 2.6% at present. The abundant liquidity could exacerbate volatility in Vietnam’s financial markets, especially against the backdrop of tighter global monetary conditions and rapid domestic credit growth,” according to Fitch.

Vietnam is angling for a promotion to emerging markets status. The country is currently classified as a frontier market by the major index providers. Vietnam has some issues to address before gaining that coveted promotion, including low per capita income and the need to recapitalize some banks.

Vietnam previously lifted foreign ownership limits on other sectors, including consumer groups, which combine for over a third of VNM’s roster.

For more information on Vietnam ETFs, visit our Vietnam category.