Strong Q2 earnings, lower interest rates to bolster Vietnam stocks

Strong second-quarter corporate earnings and declining interest rates are expected to support Vietnam's stock market in the coming months, brokerage firms said, as the market moves beyond a period of limited news flow and enters a more favorable phase driven by improving fundamentals.

These factors are expected to provide support for VN-Index, which tracks the Ho Chi Minh Stock Exchange's (HoSE) performance, to reach higher levels in the remaining months of the year.

VN-Index ended June lower, with trading value remaining subdued. The weak momentum extended into the first trading sessions of July, pushing the index below the 1,850-point level.

Brokerages attributed June's lackluster performance largely to a temporary lull in market-moving information. However, they expect sentiment to improve as listed companies begin releasing second-quarter earnings this month.

Maybank Securities Vietnam (MSVN) forecasts listed companies' Q2 earnings growth will come in slightly above expectations. Banks, retailers and energy companies are expected to outperform, supported by lower provisioning costs, higher electricity prices and sustained strength in crude oil prices.

Meanwhile, property developers, steelmakers and aviation logistics firms are expected to deliver results broadly in line with forecasts, while maritime logistics companies could exceed expectations. Fertilizer producers and the broader chemicals sector, however, are likely to report weaker earnings due to a sharp decline in urea prices.

MSVN also expects easing tensions between the United States and Iran, together with lower crude oil prices, to help bring inflation below 5% by year-end while supporting stability in the foreign exchange market.

The brokerage added recent regulatory changes, including the easing of bank liquidity requirements such as the loan-to-deposit ratio (LDR) and short-term funding ratio (SML), along with measures to promote cashless payments, should help ease liquidity pressures across the banking system.

While these factors have yet to return to fully favorable levels, particularly as stronger credit growth could renew pressure on macroeconomic balances, MSVN said the State Bank of Vietnam appears increasingly willing to tolerate higher risks in support of the government's goal of achieving 10% GDP growth during 2026-2027.

Against that backdrop, the brokerage expects 12-month deposit rates, which it believes peaked at 7.5-8% in early Q2, to gradually decline to around 7% by the end of the year.

MSVN said stronger corporate earnings and lower interest rates should provide key support for the stock market in July despite the potential re-emergence of tariff-related concerns.

The brokerage maintained its year-end VN-Index target of 2,000 points, implying a projected 2026 price-to-earnings ratio of 12.8 times, equivalent to the five-year average minus one standard deviation. It noted the market continues to be underpinned by solid economic growth, flexible policymaking and ongoing capital market reforms despite external uncertainties.

MSVN forecasts market-wide earnings per share (EPS) growth of 13-16% in 2026, driven by favorable domestic economic conditions, higher infrastructure investment, and the impact of government growth-support measures.

The brokerage also expects Vietnam's anticipated inclusion in the FTSE Russell Emerging Markets Index from September 2026 to provide additional support for the market over the following 12 months.

Portfolio rebalancing opportunity

MBS Securities shared a similarly constructive outlook, saying the market is likely to benefit from the upcoming earnings season and positive macroeconomic indicators, with inflation expected to have peaked as oil prices fell sharply in June.

The brokerage said the most challenging period for the economy has passed and argued that the current period of weak liquidity should be viewed as an opportunity to rebalance portfolios ahead of a new growth cycle in the second half of 2026 rather than as a source of risk.

MBS said valuation disparities across the market have created a rare investment opportunity. While the VN-Index is trading around 1,860 points, most stocks outside the Vingroup ecosystem are valued at levels equivalent to an index near 1,750 points, with many sectors still trading below the equivalent of 1,600 points.

It said the current environment offers an opportunity to accumulate shares at discounted valuations over a three- to six-month investment horizon, particularly in securities firms, airlines, banks, logistics, power generation and distribution companies, seafood exporters, and Vingroup-related stocks.

According to MBS, market liquidity remains subdued as investors need more time to assess the feasibility and effectiveness of the government's recently announced support measures.