Vietnam’s stock market has recently faced a significant downturn after a series of consecutive gains. Following a remarkable nine-session increase, the VN-Index retreated sharply, falling below the 1,720-point threshold.
Market Decline Details
On December 10, the VN-Index saw a decline of 1.6%, equating to over 28 points, marking it as the poorest-performing stock market in Asia on that day. This drop was largely influenced by a sell-off of heavily traded stocks, particularly those associated with the Vingroup conglomerate, including Vietjet (VJC) and Sabeco (SAB).
- Vingroup stocks affected: VIC, VHM, VPL, VRE
- Combined loss from these stocks: 27 points off the VN-Index
Market Outlook and Investor Sentiment
Despite the recent adjustments, investors remain cautiously optimistic. Many blue-chip stocks have not experienced significant increases and offer attractive prices following the recent market adjustment. Research by SSI indicates potential buying interest may emerge if negative news does not further impact market sentiment.
Historical Trends and Projections
According to SSI Research, data from the past three years suggests that the stock market typically performs well between December and March. Historically, there is a 75% chance of market growth during this period compared to a 50% chance at other times. The average monthly returns have been significantly higher during this phase.
The report anticipates an improvement in liquidity but notes that it will likely remain at average levels due to ongoing liquidity constraints in the banking system. Notably, the upcoming listing of VPX and VCK in December may provide a much-needed boost to investors’ capital.
Long-Term Growth Potential
Vietnam aims for a double-digit GDP growth rate from 2026 to 2030, supported by structural reforms, strong foreign direct investment (FDI), and accelerated infrastructure investment. These elements are expected to provide a solid foundation for sustainable growth in the stock market.
SSI has raised its VN-Index target for 2026 to 1,920 points. Currently, the index trades at an estimated P/E ratio of 14.5 for 2025, comparable to regional markets, although its projected earnings growth for 2026 is expected to be superior at 14.5% versus the regional average of 11.5%.
- P/E ratio of VN-Index (2025): Approximately 14.5
- Projected earnings growth (VN-Index 2026): 14.5%
- PEG ratio: 0.96, significantly lower than the regional average of 1.44
Aligning with these sentiments, analysts at Dragon Capital suggest Vietnam’s market is well-positioned for continued growth into 2025 and 2026. They expect that the earnings of 80 monitored companies will increase by an estimated 21.3% in 2025, maintaining a 16.2% growth rate in 2026.
Moreover, Vietnam’s elevation from a frontier market to an emerging market status could attract substantial international capital inflows, setting the stage for a new growth cycle. PYN Elite Fund’s head, Petri Deryng, expressed optimism regarding economic growth, forecasting the VN-Index could reach 3,200 points by 2028, assuming an average profit growth rate of 18-20% in the coming years.
