Vietnam's benchmark VN-Index likely to reach 1,800 points next year: broker

Despite potential short-term volatility from increased profit-taking pressure following a high-margin phase in late July, Vietnam’s benchmark VN-Index is expected to reach the 1,750-1,800 point range in 2026, according to leading broker Saigon Securities (SSI).

The main drivers stem from a robust profit growth recovery, supported by a rebound in the real estate market, increased public investment, a favorable interest rate environment, easing tariff concerns, and notably, expectations of a market status upgrade from "frontier" to "emerging" in October, SSI said in its August strategy report.

Investor optimism surged on several key catalysts, including favorable macro conditions as the U.S. set a reciprocal tariff rate of 20% on Vietnamese imports, down from 46% announced in April; positive momentum in the U.S. stock market; and a Q2/2025 earnings season that exceeded expectations across most sectors.

Total revenue in Q2 of companies listed on the Ho Chi Minh City Stock Exchange (HoSE) rose a modest 6.9% year-on-year, while net profit after tax attributable to parent company shareholders (NPATMI) surged 31.5%, significantly outpacing the 20.9% growth recorded in Q1, the report noted.

Banking remained the key growth driver, contributing 44% of the market’s total NPATMI and 28% of NPATMI growth, followed by real estate (8% of NPATMI, 20% of growth) and utilities (7% of NPATMI, 12% of growth).

SSI maintained forecast for market-wide NPATMI growth of 13.8% for 2025, implying a 15.5% increase year-on-year in H2.

The market’s forward price-to-earnings (P/E) ratio rose from 8.8x on April 9 to 12.6x as of August 6, yet it remained below the five-year average of 13x and the peak range of 15-17x seen during previous market highs.

SSI also maintained its expectation that FTSE Russell, a member of the London Stock Exchange Group, would announce the upgrade of Vietnam’s stock market to "emerging" status in October 2025, saying the move could attract around $1 billion in capital inflows from index-tracking exchange-traded funds (ETFs).

Observations from other markets indicate that markets typically rally ahead of an upgrade, fueled by expectations of increased foreign capital inflows and a significant boost in investor sentiment. This is expected to be a key supportive factor for Vietnam’s market in H2.

The broker noted that Vietnam remains attractive in the medium to long term thanks to stable macroeconomic fundamentals and a recovering growth outlook.

The government continues to accelerate public investment disbursement, particularly in transportation and energy infrastructure. It is also advancing policies to alleviate challenges in the real estate sector, such as streamlining legal procedures and expediting the disbursement of social housing loan packages.

At the same time, Vietnam remains the most promising candidate in Southeast Asia for a status upgrade from a "frontier" to an "emerging" market by FTSE Russell and New York-based MSCI.

Amendments to the Securities Law, Investment Law, and higher foreign ownership limits are being vigorously pursued to facilitate this upgrade, according to the report.

The VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), closed July at 1,502.5 points, marking an impressive 9.2% gain and lifting the year-to-date advance to 18.6%.

The Vietnamese financial market is entering a pivotal stage with expectations of status upgrade (from "frontier" to "emerging"), institutional reform, and comprehensive digitalization.

In a resolution passed on June 27, 2025, the National Assembly, Vietnam's legislature, requested the development of capital market mobilization channels. Specifically, all preparations must be completed in 2025 to get the market status upgraded.

Upgrading the market status is a key priority assigned by the Government to the Ministry of Finance. Under the ministry’s direction, the State Securities Commission (SSC) and relevant agencies have actively worked to improve the legal framework, upgrade technological infrastructure, and improve market operation conditions to meet the stringent standards set by international rating organizations.

Under the Prime Minister’s Decision No. 1726/QĐ-TTg dated December 29, 2023, which approved the Stock Market Development Strategy until 2030, the Government requests diversifying the investor base and improving the quality of investment demand to ensure sustainability.