While technical indicators of cash flow show no signs of overheating, the VN-Index might experience short-term volatility as mounting profit-taking pressure begins to weigh on the market.

Forward P/E back to 10-year average Since the start of 2025, global stock markets have entered a robust growth phase, with many indices surpassing their previous peaks. This upward momentum has not been limited to developed and emerging markets—it has extended to frontier markets as well. Against this backdrop, the VN-Index’s gain of over 30% in the first eight months of the year appears to be part of a broader trend, rather than an exceptional occurrence. In terms of valuation, Vietnam’s stock market remains relatively attractive, according to a recent report by SSI Research. The forward price-to-earnings (P/E) ratio currently stands at approximately 13.2—on par with both the regional average and the VN-Index’s historical mean over the past decade. This level is significantly below the peaks of 15–17 observed during the bullish cycles of 2017–2018 and 2020–2021, as noted by Bloomberg. Moreover, despite offering stronger prospects for earnings and return on equity (ROE) growth, Vietnam’s market is still trading at valuations that are either lower than or comparable to the MSCI Emerging Markets Index. Assuming market earnings grow by approximately 15% in 2026, the forward P/E ratio of Vietnam’s stock market is projected to decline to around 11.4—below its historical average. To gauge the potential impact of a market status upgrade, investors may look to China’s experience following its reclassification as an emerging market by MSCI in June 2017 and FTSE Russell in September 2018. In anticipation of these upgrades, the MSCI China Index and FTSE China Index surged by 54% and 45%, respectively, in 2017. These precedents have fueled optimism and bolstered investor confidence in the VN-Index’s long-term growth trajectory. From the perspective of earnings yield, Vietnam’s stock market remains relatively attractive, currently offering around 7.6%. This return surpasses that of traditional investment channels such as savings—where deposit interest rates typically range from 5–6%—and real estate, which yields approximately 3–4% from rentals. While gold has delivered an impressive average annual return of 17% over the past five years, compared to the VN-Index’s 13% growth during the same period, this disparity suggests that the stock market is not excessively overheated relative to the gold investment channel. Support from economic growth From a broader macroeconomic standpoint, Vietnam’s stock market appears to have only partially captured the country’s economic expansion. Using 2010 as a baseline—when the economy was facing significant challenges and arguably at a cyclical low—the VN-Index has risen approximately 3.4 times, from 485 to 1,630 points. This growth mirrors the increase in national GDP, which expanded from US$147 billion in 2010 to an estimated US$500 billion by 2025. The current uptrend in the stock market appears to be a reflection of Vietnam’s past economic growth, rather than a signal of future prospects. It does not yet account for potential double-digit GDP growth or the transformative impact of ongoing institutional and economic reforms—particularly those aimed at fostering the private sector. Given that the stock market is fundamentally driven by expectations, forward-looking factors carry more weight than historical performance. As of August 15, the ratio of total market capitalization to GDP stood at 73%, notably below the 85–93% range observed during the 2020–2021 period and lower than that of regional peers such as Thailand and Malaysia. From a market perspective, liquidity remains a key indicator for assessing whether the VN-Index is overheating. Recently, transaction values have surged, driven by several factors. Beyond the influence of low interest rates, the successful rollout of the KRX trading system has significantly reduced latency and enhanced the exchange’s order-handling capacity. On the margin lending front, total outstanding margin loans at securities firms reached approximately VND300 trillion (US$11.5 billion) by the end of Q2 2025—marking a 34% increase year-on-year and a 22.3% rise compared to the beginning of the year. As of the end of June, the margin loan-to-equity ratio at securities firms is estimated to have surpassed 100%, reflecting heightened investor activity. However, this level remains below the 127% ratio recorded during the VN-Index’s surge past 1,500 points in Q4 2021, and well within the regulatory ceiling of 200%. Notably, several securities companies are preparing for substantial capital increases, which will help dilute their margin exposure and reduce the average ratio of outstanding margin loans to total equity across the market. According to SSI Research, the recent gains in Vietnam’s stock market reflect the broader economic transformation that has unfolded over the past 15 years. Current valuations are aligned with the five-year average and remain comparable to—or even lower than—those of markets at a similar stage of development. Technical indicators of cash flow show no signs of overheating. However, following a sharp recovery in market liquidity over the past four months, the VN-Index may face heightened short-term volatility as profit-taking pressure begins to mount. While market fluctuations are inevitable, the stock market fundamentally operates on expectations. For an emerging or frontier market like Vietnam, sustained economic growth remains the most critical driver. With double-digit GDP growth targeted for the upcoming five-year cycle and comprehensive institutional reforms underway—particularly those aimed at strengthening the private sector—the investment landscape is increasingly attractive. Opportunities to invest in high-potential businesses at reasonable valuations continue to position Vietnam as a top choice for both domestic and international investors.