A key component of the “Comprehensive Reform Plan for Vietnam’s Financial Market in Support of Sustained High Economic Growth Through 2045”, recently approved by the Government, is to gradually shift the investor base from retail to institutional investors, with priority given to developing financially strong institutional investors.
The measures set out in the plan are regarded as a crucial step towards redirecting capital from short-term investments to medium- and long-term financing, fostering deeper and more sustainable development of the capital market.
Shifting the investor structure
The plan aims to build a synchronized, modern, and internationally integrated financial market in Vietnam, with a balanced and well-structured framework that strengthens the market's role as a key provider of medium- and long-term capital for the economy. It is also intended to serve as a driving force for sustaining high economic growth through 2045.
Under the plan, by 2045, Vietnam's financial market is expected to reach an advanced level of development, operating on market principles with institutions, infrastructure, financial products, investor participation, and regulatory and supervisory mechanisms aligned with international standards.
In terms of specific targets, by 2030, the value of foreign investors' assets in the capital and securities markets is projected to reach around 15 percent of GDP. Meanwhile, the combined net asset value of securities investment funds is expected to equal 5 percent of GDP, while the total assets of pension funds are targeted to grow at an average annual rate of 11.5 percent during the 2026-2030 period.
The plan also seeks to foster a more sustainable investor base by prioritizing financially strong institutional investors, including investment funds, pension funds, and insurance companies, and encouraging the expansion of medium- and long-term capital flows.
According to Vice Chairman of the State Securities Commission, Bui Hoang Hai, individual investors currently account for about 85 percent of all participants in the country's stock market, while institutional investors still represent only a small share of the financial market. By comparison, institutional investors typically account for 60 percent to 80 percent of market participation in the United States, Europe, and Japan.
This imbalance underscores how Vietnam's investor structure differs markedly from that of more mature financial markets. The dominance of retail investors has contributed to greater market volatility and a strong preference for short-term trading. During periods of market turbulence, individual investors generally have lower risk-bearing capacity than institutional financial institutions, adding to market instability. Such a structure runs counter to the goal of developing the stock market into the economy's primary channel for mobilizing medium- and long-term capital.
According to market experts, promoting institutional investors while enhancing market stability are two parallel objectives in Vietnam's financial market development and reform strategy and have remained key priorities for regulators for many years. In this context, the plan's emphasis on strengthening institutional investors is expected to help reshape capital flows. Rather than fueling short-term speculative trading, investment capital would increasingly be channeled into medium- and long-term financing, providing direct support for business expansion and creating stronger momentum for sustainable economic growth.
Deepening the capital market
According to estimates by the Ministry of Finance, achieving double-digit economic growth will require investment capital of approximately VND38 quadrillion (US$1,447 billion) during the 2026-2030 period alone. However, state budget resources are expected to provide only around VND8.5 quadrillion, accounting for less than 20 percent of total financing needs. The remaining capital will therefore have to be mobilized from the private sector and international sources.
The Ministry of Finance also projects that about VND5.4 quadrillion will need to be raised through the capital market—more than double the amount mobilized during the 2020-2025 period. At the same time, the banking sector has limited room for further credit expansion, underscoring the need to strengthen alternative long-term financing channels.
According to Dr. Nguyen Tri Hieu, a finance and banking expert, the commercial banking system, with its reliance on short-term deposits, cannot continue to shoulder the economy's long-term financing needs without increasing the risk of maturity mismatches. A deep and well-developed financial market, therefore, should be one in which institutional investors play the leading role in providing medium- and long-term capital.
Many experts believe that greater participation by institutional investors and financial institutions in the capital market will help ensure that corporate valuations more accurately reflect underlying fundamentals, enhance market transparency, and reduce the economy's reliance on bank credit. A deeper capital market would also strengthen macroeconomic resilience by improving the market's ability to absorb global financial shocks and reducing the risk of sudden capital outflows—an issue that has affected the capital market in recent years.
The restructuring of the investor base and the more targeted allocation of capital are also expected to foster a safer, more transparent, and sustainable financial ecosystem, enhancing the attractiveness of Vietnam's financial market while reinforcing its standing in the regional and global financial landscape.
According to Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, the economy currently relies on four main sources of financing, including bank credit, the capital market, public investment, and foreign investment. However, each of these channels faces its own constraints, with bank credit in particular offering very limited room for further expansion.
The challenge is not merely to mobilize additional capital to ease pressure on the banking system but also to broaden and enhance the efficiency of the economy's capital allocation channels while restructuring the investor base to support deeper market development. At present, the market remains dominated by retail investors, transparency is still limited, and the range of financial products lacks diversity. These shortcomings underscore the urgent need to restructure the financial system and capital market towards a more balanced, resilient, and sustainable model.
According to Ms. Dang Nguyet Minh, Director of Research at Dragon Capital Fund Management, the domestic capital market currently lacks the high-quality investment products sought by long-term institutional investors. For example, the stock market's capitalization remains heavily concentrated in the financial and real estate sectors, whose combined share has risen from 56 percent in 2020 to 68 percent in 2026.
By contrast, sectors expected to drive future growth—such as high technology and large-scale consumer industries—are largely absent from the market. Compared with other markets in the region, Vietnam's capital market faces a significant shortage of both sectoral breadth and market depth, limiting its ability to attract long-term investment capital.
