How to invest in the Vietnamese stock market: A dream of EM versus the reality of a margin bubble

Many people may be having trouble sleeping at the end of October, as many stock markets began to plummet and adjust downwards. Even gold prices were no exception, having surged to all-time highs, sending the mercury crashing across nearly every asset class since mid-year, continuing through October.

Is the honeymoon period coming to an end by the end of this year?

Many people start to wonder, "Huh? What should I do now?" Some people ask, "Is now the right time to get in?" When they see signs that many markets are starting to fall, they want to seize the investment opportunity. Some people may be stressed, "Are (stocks) too high right now?" What's going on right now?

The market goes up and down in cycles. A good investor must be “patient.”

Personally, I view the current market ups and downs as a normal part of the market cycle. I encourage all investors to understand market cycles. All assets carry risks, and all assets undergo cycles of ups and downs.

I'm actually pretty indifferent when I see the market fall because it's been through cycles. As the saying goes, "you an not predict but you can prepare" because in the end, you really can't predict the future.

Even world investor Warren Buffett said that people like to think that he and Charlie Munger are smart or can predict the market. But in fact, Grandpa said that they can't predict the market either. What they do is "wait for a really bad stock market crash and then buy, see if there's a deal that can swing back or invest. If there isn't, don't invest." It's a simple principle.

Most recently, Bank of America shares, which Buffett bought heavily during the 2008 subprime crisis, have risen back to their pre-crisis levels. Although it took 17 years for the price to return to $53, Buffett has profited more than 5x by buying the stock during the crisis and waiting it out.

“Patience is an important quality for investors.” Let me reiterate.

Even Apple stocks that Buffett has been selling in waves because he thinks they are too expensive now, so he sells them to make a profit.

As for those who ask whether the market will fall, I believe Grandpa can't answer that question. But he knows that "if the market really does fall, he'll have enough money to invest at any time."

One thing we need to be very mindful of is to try not to get carried away by market sentiment or the price of an asset. When it's too expensive, we might see some assets reach all-time highs, or some assets rise to the point where their value is unmeasurable.

I hope that anyone who is starting to feel uneasy will quickly regroup and assess their own readiness, as investors are always faced with risks from uncertainty.

The best way to control risk is to mindfully monitor the global situation and do your homework to check your portfolio's health before the end of the year. Check which assets are currently profitable and decide which strategies you should sell or hold.

I'd like to update you on the global stock market situation. Several markets that seem a bit scary right now include the US S&P500 index, which has surged 66%; Japan's TOPIX index, which has jumped 67%; and Vietnam's VNI index, which has surged 60% over the past two years (2024-2025). All three of these markets have risen more than 60%, which means they're considered higher risk, but I can't say how high they'll rise.

In particular, the US market, which has been increasingly questioned about the potential for an AI bubble, continues to set new records, with both the S&P 500 and Nasdaq rising for three consecutive years. Looking back at the past 10 years, we find that most stocks rise for around three consecutive years, followed by a year of decline. This means that next year, 2026, there's a possibility that the market could adjust. The extent of the adjustment will depend on market factors at the time.

But if anyone thinks that the stock market will rise for 10 years in a row, that is an extremely difficult or impossible possibility. Because most recently, US stocks rose the most for 5 consecutive years, which happened between 2003 and 2007, and in 2008 the market fell 40%.

Therefore, if US stocks continue to rise next year, we should not feel "elated" but rather "cautious." If we become swept up in a bubble, it's extremely dangerous.

As the market has been hitting all-time highs over the past few months, I've been trying to tell everyone to gradually sell their gains and hold onto them. I'm adhering to Grandpa Buffett's principle of holding cash and waiting to invest in good assets during market crashes.

Is Vietnam's stock market really a bubble? Waiting for an upgrade to emerging markets…should it continue?

Another market that's been questioned as to whether it's a bubble is the Vietnamese stock market. Those holding it in their portfolios who don't want to lose a lot of money should listen up!

Vietnam's stock market has become the hottest in the ASEAN region this year, with the VN Index surging from 1,262 points at the beginning of this year to 1,657 points, an increase of more than +32% YTD (as of 11/09/2025). However, if we exclude large stocks like Vingroup, the actual market growth is only 11%, reflecting the overall high market concentration. And what's shocking is that the Vingroup group has surged by hundreds of percent, with the use of margin accounts, which are large-scale borrowing to buy stocks, pushing the market up at this time.

It must be said that this year has seen retail investors in Vietnam flock to invest in stocks through margin accounts, hoping for intense speculation, which has increased market vulnerability.

Vietnam's market valuation may not yet be a "bubble," as evidenced by the VN Index's P/E ratio of around 16.16. This is lower than the bubble point in 2017, when it soared above 20, and lower than or similar to many ASEAN markets. For example, Thailand's P/E ratio is around 16. This means that Vietnam isn't overvalued across the board, but rather "dragged up" by a few large-cap stocks, such as Vingroup and the financial sector. However, it's not just large-cap stocks; there are many fundamentally sound stocks that are also seeing price increases, though perhaps not as strongly as those leading the market.

However, one situation that needs close monitoring is the looming real estate crisis stemming from a major real estate company, Novaland, facing liquidity problems and the inability to repay maturing bonds. It is expected that bonds from other companies will face similar problems, potentially impacting Vietnamese financial institutions and banks as well.

The heat from this year's market surge has not only brought smiles, but also pressured some to sell quickly to lock in profits, fearing further market volatility. Meanwhile, in August, foreign investors saw the largest ever sales of Vietnamese stocks, further depreciating the dong.

If in the future there is any negative news, either domestic or international, that has a strong impact, there is a chance that Vietnamese stocks will fall. If there is even a slight selling pressure, it could trigger an immediate 'forced sell', which would drag the market down rapidly.

What worries investors is that Vietnamese stocks have crashed, repeating the history of 2022, when the government cracked down on corruption and stock market manipulation.

However, at the same time, the Vietnamese stock market also has positive news supporting it. Last October, the FTSE rating agency was reviewing the status of the Vietnamese stock market from a frontier market to an emerging market (EM). The results of the upgrade are expected to be known as early as March 2026.

Historically, any country that has had its stock market upgraded has typically seen its stock market rise by 50-100%. Vietnam's stocks have risen by a total of 60%, so there is still a chance of further upward adjustments. However, after the upgrade results are announced next year, the market may turn positive but not rise dramatically, as retail investors may sell to make short-term profits, "Sell on Fact."

In the long term, if the Vietnamese stock market is upgraded to an EM market, it will be an important factor in attracting foreign capital back into the market in the medium to long term.

The macroeconomic outlook remains strong, driven by continued inflows of foreign direct investment (FDI). The latest GDP growth in the first half of this year was 7.5%, approaching the Vietnamese government's 8% target. Inflation figures are low, unemployment rates are low, credit continues to expand, infrastructure investment has surged by more than 40%, and the Manufacturing Index (PMI) remains consistently above 50. However, exports continue to contract due to the impact of US import tariffs.

The dong remains unstable. Since the beginning of the year, it has weakened by more than 3.4%, hitting a record low and becoming the weakest currency in ASEAN. Analysts at MUFG predict that the dong could fall further to 26,500 dong per dollar by the end of the year, as rising imports and a narrowing current account balance are spurring foreign capital withdrawals. While stocks offer returns, if the currency continues to weaken, profits are lost due to exchange rates.

If we look through the framework of 'The Psychology & Stock Market Cycle', the Vietnamese market may be in an 'exciting' or 'thrilling' period, which is a period when most people are overconfident, thinking that investing will bring profits, which becomes a risk that needs to be careful.

This is an overview of Vietnam. The stock market is not currently experiencing a bubble, but rather a Thrill cycle, where the short-term market is driven by high leverage. If there is any negative news or an upgrade to the EM market does not go as expected, there is a high risk of a short-term correction. However, Vietnam still has a strong macroeconomic background, which is a positive story.

Therefore, for anyone considering investing in Vietnamese stocks at this time, I recommend carefully considering whether the stocks they are investing in are truly good and undervalued. For those already holding Vietnamese stocks, it's time to decide whether to continue holding Vietnamese stocks or profit from them.

Look beyond the 'rebalance - focus on diversifying investments around the world - add Chinese stocks to secondary portfolios'

By now, you should have a clear picture of what might happen next year for the stock markets that are surging in the US and Vietnam. Be careful not to get carried away by today's market sentiment, as if you overlook the short-term, the market could decline.

Those who already have a Core & Satellite Port (80:20) should now review their portfolios to ensure they are balanced according to the specified proportions. For example, a Core portfolio, which weighs 80% of the total portfolio, is primarily invested in bonds and stocks spread across the globe. If the proportion of stocks has increased due to price increases, it means you are making a profit. For example, if you invest in US stocks for more than 2-3 years, your profits will increase, affecting the proportion too much. Therefore, you should sell some of those assets. This is called Rebalancing, which brings the portfolio back to 80%. As for the profits, you should park them in the money market to await a new investment opportunity in the future.

For Satellite portfolios, if you currently hold US stocks (in addition to your Core) or Vietnamese stocks and are concerned that the Vietnamese or US stocks have risen significantly to the point where you feel uncomfortable holding them, you may need to rebalance by selling some of your stocks to make a profit.

The reason for selling some US and Vietnamese stocks is because the US is the world's number one country and a major stock market. Grandpa Buffett always said, "Never bet against America." No matter what happens to the US, you must invest in your portfolio. Your primary portfolio already holds US stocks. However, if you also invest in secondary portfolios, you can sell them for profit.

Vietnamese stocks are already in your Satellite portfolio (20%) if you're aiming for long-term growth. A sharp decline presents an investment opportunity, but you need to choose the right ones. Jitta Wealth's Market Prediction data, as of August 25, 2568, clearly shows that Vietnamese stocks remain in a 'balanced' state. Among the 50 top-quality stocks in the market, 25 are still cheap and 25 are starting to become expensive. This means there's still room to invest in fundamentally sound stocks at reasonable prices, ideal for long-term investment, awaiting foreign capital inflows next year. However, you'll need to be patient with short-term volatility.

Actually, I've always had a market I've been recommending for investment: the Chinese stock market. It's a market with low valuations, as the Chinese and Hong Kong stock markets haven't risen as sharply as Vietnam's or the US's. From the beginning of this year until now, the SSEC index has risen 19.4%, the CSI 300 index has risen only about 19.32%, and the Hang Seng Index has risen about 15-17%.

Although China is facing a trade war with the United States that shows no signs of ending, as China is the world's second-largest economy and the United States is trying to prevent its growth from surpassing it, despite the two superpowers having tried to counter each other through various measures in the past, they have finally negotiated and finally eased the global situation.

The Chinese government continues to advance its self-reliance strategy, focusing on developing deep technologies and driving the digital economy to a level no less than the United States. China is also a market leader in electric vehicles, clean energy, and possesses rare earth minerals, which are the upstream sources of deep technology production, enabling it to negotiate trade deals with the United States. The domestic economy is on the path to recovery after overcoming a severe real estate crisis.

China's GDP grew by 4.8% in the third quarter, following a 5.3% growth in the first half of the year. This was due to contraction in real estate investment and slower growth in private consumption, despite government stimulus measures and the impact of US tariffs on exports. The government has set a GDP growth target of 5% for the entire year, while economists predict growth will be lower than 5%.

If we look at the Market Prediction figures for Chinese stocks as of August 25, 2568, the top 50 best Chinese stocks have 44 undervalued stocks and 6 overvalued stocks, which is 7.33 times undervalued.

Hong Kong Stock Market Prediction as of August 25, 2568. The top 50 best Hong Kong stocks have 33 cheap stocks and 17 expensive stocks, equivalent to 1.94 times the cheap stocks. The Hong Kong market is a market that foreign investors choose to invest in more than Chinese stocks, making it a market with high liquidity and more opportunities for stocks to rise.

Personally, I see China as the market with the most upside potential. I've invested in satellite portfolios, which comprise a combined 20% of my portfolio. I believe that even if the Chinese or Vietnamese stock markets fluctuate sharply, the damage will be limited. However, a core portfolio, which provides comprehensive risk diversification, can help balance the entire portfolio and ensure steady, gradual growth.

But no matter which asset you choose to invest in, the most important thing is that you don't just listen to or trust fund managers or investment advisors. You must also do your homework and study investment information, basic investment principles, and investment tools to use so that you can make the right choices and decisions.

Because as long as you invest without knowing anything, I guarantee you won't be able to sleep every day. Especially when you see the price keep rising, you will feel like, "When should I sell?" This is investing without strategy, relying solely on emotion and guesswork.

But if we invest strategically, I'm confident you'll invest safely, sleep soundly, and your portfolio will continue to grow over the long term. Most importantly, you'll be a proud, successful investor.