OCBS Securities chief suggests stock selection strategy for 2026

Investors should adopt a flexible approach to equity allocation, focusing on stocks with solid fundamentals, stable earnings, and clear medium-term prospects, said Nguyen Duc Quan Tung, CEO of Hanoi-based OCBS Securities JSC.

Vietnam’s capital and stock markets have entered a new phase after being upgraded by FTSE Russell to secondary emerging market status, alongside efforts by regulators to improve the legal framework, facilitate investor access, and raise the quality of listed companies. Market participants are also strengthening their financial capacity and standards to keep pace with the market’s development.

Speaking on the Financial Street talk show, Tung, who is also a board member at OCBS, said that despite the status upgrade, the market still needs to prioritize three key areas of reform to attract large and sustainable capital inflows.

The first is the institutional framework. Regulations such as non-prefunding requirements, which oblige investors to deposit funds before trading, remain bottlenecks that make the market less flexible than international standards and deter foreign investors, he said.

Vietnam should accelerate improvements to these mechanisms, enhance transparency around foreign ownership limits, and allow online order placement through global brokerage platforms. Such steps would help the market fully meet FTSE Russell’s criteria, supporting a formal upgrade to secondary emerging market status in September 2026, with MSCI potentially following in the 2028-2030 period.

The second area is market infrastructure. While the KRX trading system, officially launched in May 2025, marked a significant step forward by supporting modern trading and derivatives, further progress is needed, Tung said. He pointed to the rollout of a central counterparty clearing (CCP) model from 2027, wider adoption of straight-through processing (STP), and the expansion of currency hedging products, which he said are increasingly important amid global volatility.

The third factor is information transparency and corporate quality. Foreign investors favor markets with strong corporate governance, clear financial reporting, and adherence to ESG standards. Although Decree 245 has shortened IPO approval timelines from 90 days to 30, the CEO said authorities should push for more high-quality listings and lift foreign ownership caps in non-sensitive sectors.

Vietnam’s stock market currently has a capitalization of about $260 billion, but price movements are driven largely by fewer than 30 large-cap stocks, highlighting the need for more sizeable, transparent companies that can represent emerging core industries of the economy, Tung noted.

“The scale and quality of listed companies not only determine market depth but also reflect the economy’s underlying strength,” he said. “When more leading companies choose to list, the market becomes more attractive, liquidity improves, and valuations are more grounded, enabling capital to be allocated more efficiently rather than concentrating on a handful of bellwether stocks.”

The executive expects the 2025-2027 period to see Vietnam's largest wave of IPOs ever, offering an opportunity to reshape market supply with more large companies across a broader range of sectors.

Looking ahead to 2026, Tung said Vietnam’s stock market is likely to enter a new cycle supported by two major drivers.

The first is corporate earnings, with earnings per share (EPS) forecast to grow by 18% to 20%, supported by strong GDP growth and robust credit expansion. As the economy operates in an expansionary phase, leading companies are expected to benefit first.

The second driver is valuation. Vietnam’s forward price-to-earnings (P/E) ratio for 2026 is estimated at around 11-12 times, significantly below the five-year average and below expected earnings growth.

A price-to-earnings-to-growth (PEG) ratio below 1 suggests valuations remain attractive, with room for a re-rating towards an average P/E of about 15 times, broadly in line with regional emerging markets after Vietnam’s upgrade is formalized in September 2026.

Large sectors such as banking continue to offer attractive valuations and steady profit growth, while securities firms are expected to benefit from IPO activity and capital raising ahead of the market upgrade. Consumer, retail, industrial real estate and energy stocks are also likely to gain from a recovery in domestic demand, Tung said.

“In the current environment, the appropriate strategy is to flexibly adjust equity allocations, prioritizing stocks with strong accumulation bases, stable business results, and clear growth prospects in the years ahead,” he added.