Vietnam's stock market attractively priced: Finnish fund PYN Elite

Vietnam’s stock market is attractively priced, with a price-to-sales (P/S) ratio of 1.3, said Petri Deryng, portfolio manager at Finnish investment fund PYN Elite.

The P/S ratio is a financial metric that assesses a company's market value relative to its revenue.

In a recent note sent to investors, Petri Deryng said that Vietnam's ongoing economic growth continues to boost the revenues of listed companies and the market’s growth potential.

The price-to-earnings (P/E) ratio for Vietnam’s stock market in 2025 is estimated at 11. Additionally, Vietnam’s medium-term growth outlook has recently strengthened.

However, U.S.-initiated tariff measures have made the outlook for the 2025 stock market extremely unpredictable. Factors such as slowing U.S. economic growth, disruptions in global trade, the Federal Reserve’s monetary policies, Vietnam-U.S. tariff agreements, U.S. dollar developments, and the U.S. government’s debt financing, along with rising U.S.-China tensions and investor capital reallocations, all add to the uncertainty, he noted.

The current outlook is quite murky, and close monitoring is necessary, Deryng stressed.

According to him, several factors could either drive Vietnam’s stock market up or down, depending on the timing and intensity of specific events.

If listed companies in Vietnam expand operations in the coming years, the market’s P/S ratio could fall close to 1.0. On the other hand, strong economic growth, rising corporate earnings, favorable financial market conditions, and the modernization of the stock market support the view that the P/S ratio could rise to nearly 2.0.

However, this path will certainly not be smooth, especially given the potential uncertainties in the next six months, he noted, adding there is no need to worry about Vietnam or PYN Elite’s portfolio, even in the face of sudden shocks. Companies with low debt in a low-debt country tend to recover quickly from potential disruptions.

Investment focus: Domestic growth drivers

PYN Elite’s portfolio focuses on companies growing due to strong domestic demand in Vietnam. Banks remain a significant component, accounting for 47% of the portfolio. Although the fund sold TPB of TPBank earlier this year for a modest gain, it increased its holdings in VIB of Vietnam International Bank and MBB of MBBank.

The banking sector has faced a few challenging years, with slower-than-usual growth due to the 2022 corporate bond market crisis, which impacted real estate and investor confidence. This year, however, banks’ credit provisioning needs are expected to decrease significantly, boosting profitability.

Moreover, the National Assembly is expected to vote in June on Draft Law No. 42, which would allow faster handling of collateral assets, bringing substantial additional income for banks, Deryng wrote.

The aviation sector represents 17% of PYN Elite's portfolio. Key holdings include ACV of Airports Corporation of Vietnam and HVN of Vietnam Airlines, with a smaller position in cargo carrier SCS (despite a 3.5% stake).

Vietnam’s aviation industry is on a strong growth trajectory expected to continue over the next decade, he noted.

The fund also strategically increased its investment in brokerage firms at the end of last year and early this year. This move was in anticipation of the new KRX trading platform boosting trading volumes and contributing to Vietnam’s potential market status upgrade to “emerging” by FTSE Russell.

The KRX system was launched in early May, and the fund expects FTSE to reclassify Vietnam within the next 10 months.

Vietnam has also recently emphasized the need to establish a central counterparty clearing house (CCP), which would further modernize the country’s trading infrastructure.

Brokerage stocks tend to be volatile, but their profits can spike during certain periods. These stocks are not ideal for long-term holding, but can yield substantial returns at times.

When the market rises, brokerage revenue grows, lending margins improve, investment banking deals increase, and proprietary trading gains surge, Deryng added.