Vietnam’s benchmark VN-Index to reach 1,400-1,420 points in 2025: broker

The VN-Index, representing the Ho Chi Minh Stock Exchange (HoSE), may hit 1,400-1,420 points in 2025, driven by an 18% market-wide profit growth and a price-to-earnings (P/E) ratio of 12.5-13x, according to broker MBBank Securities (MBS).

In its latest report, MBS highlighted 2025 as a pivotal year that marks the beginning of a new era for Vietnam, with ongoing domestic reforms and an enhanced position in the global value chain.

The broker believed that after a strong performance in 2024, Vietnam will continue to accelerate its economic growth with a rate of 7-7.5% over the next three years, solidifying its position as the leading performer among the ASEAN-6 countries (including the 10 ASEAN members and six other countries in the Asia-Pacific region: Australia, China, India, Japan, South Korea and New Zealand.

The firm identified several key macroeconomic factors that will shape Vietnam’s outlook for 2025. First, the acceleration of manufacturing will be supported by a vibrant global trade environment and a recovery in domestic investment. MBS predicted that Vietnam’s exports will grow by 9-10% in 2025, resulting in a trade surplus of $27 billion.

This forecast is based on global trade projections by the World Bank, which expects global merchandise and service trade to increase by 3.4% in 2025, higher than the 2.5% in 2024. Vietnam will also benefit from its participation in regional trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), which will help to drive domestic reform efforts.

The second key driver will be the acceleration of public investment disbursement in 2025, with a focus on major infrastructure projects, including the North-South Expressway, the North-South High-speed Railway, and the Long Thanh International Airport in the southern province of Dong Nai. These projects are expected to strengthen Vietnam's competitiveness and its ability to attract foreign investment.

MBS expected that public investment disbursement next year will reach around 85-90% of the government’s plan, representing a 24-31% rise from 2024. The government has laid out an ambitious investment plan for 2025, with a projected VND790.7 trillion (approximately $30.8 billion) for development expenditure, marking a significant increase from the previous year.

On inflation, MBS forecast that Vietnam’s average consumer price index (CPI) will rise by 4% in 2025, slightly higher than the predicted 3.9% hike for 2024. Despite this, inflation is expected to remain well below the government’s target of 4.5% next year.

However, MBS cautioned that Vietnam’s monetary policy space may be more constrained in 2025 due to the strengthening of the U.S. dollar and risks related to ongoing investigations into currency manipulation by the U.S. In this scenario, the State Bank of Vietnam (SBV) may adopt a more cautious monetary stance to stabilize the exchange rate, narrowing the room for monetary easing.

“We do not expect any cuts in the policy interest rate in 2025 and expect the deposit rate to remain in the 5.0-5.2% range. Moreover, we believe the likelihood of rate hikes amid global economic easing is low. As a result, we expect the SBV to maintain an accommodative monetary policy to support economic growth and keep lending interest rates low, thereby stimulating credit growth,” MBS commented.

Optimistic outlook for VN-Index in 2025

MBS estimated that the earnings of listed companies will grow by 18% in 2025 and 19% in 2026, driven by the stability of key sectors such as banking, construction materials, residential real estate, retail, and industrial property. With declining interest rates, lower input costs, and moderate wage increases, MBS expected significant improvements in the gross profit margins of many industries.

In addition, Vietnam is edging closer to the upgrade to an emerging market status, which could drive foreign investment flows back. The potential easing cycle in the U.S. is also expected to trigger a resurgence of foreign capital into emerging markets like Vietnam.

However, MBS also identified several risks to the market, particularly from the unpredictability of the "Trump 2.0" era, which could delay the Fed's interest rate cuts. Other risks include pressures on the exchange rate due to a weaker Vietnamese dong, slower-than-expected recovery in the residential real estate market.

The VN-Index rose 0.23% to 1,257.50 points Friday, with trading value on the HoSE falling 24% to VND13.53 trillion ($532 million).