US economic and political instability and vietnamese stock returns: the roles of firm size and government ownership

Episodes of economic and political instability in the United States have frequently been considered sources of disruption for emerging economies that are closely integrated with global markets. This research investigates how shocks are transmitted from US economic and political volatility to corporate equity performance in Vietnam, emphasizing the moderating influence of firm size and government ownership. Applying the System Generalized Method of Moments (SGMM) approach, our results reveal a positive causal linkage between US uncertainty and the stock performance of Vietnamese firms. Such a surprising outcome may be explained by a “flight-to-safety” mechanism, in which investors redirect capital toward emerging markets like Vietnam during times of turbulence in the US. The strength of this effect is not uniform across firms; smaller entities and those without state participation display greater positive spillovers. These findings provide meaningful guidance for investors, corporate leaders, and policymakers in developing economies.