Attractive valuation returns, expected to activate capital flows
After reaching 1,340 points in March, the VN-Index entered a period of strong adjustment, making investors more cautious.
According to experts, the Vietnamese stock market is currently operating in the lowest valuation zone for many years, opening up opportunities to attract long-term cash flow.
Mr. Dinh Quang Hinh - Head of Macro and Market Strategy, VNDIRECT Securities Joint Stock Company - commented that if the growth of the whole market profit (EPS) in 2025 reaches 12-17%, the projected P/E of the VN-Index will be about 9.8-10.2 times.
This is an attractive valuation zone enough to trigger capital flows back, especially when the market receives a strong enough catalyst such as upgrading, Mr. Hinh assessed.
In fact, the market is showing a clear differentiation, with many industry groups trading at deep discounts compared to the 5-year average. According to Mr. Dinh Quang Hinh, industry groups that are less dependent on external factors, supported by fiscal and monetary policies - such as banking, real estate, retail, electricity, public investment - are becoming the priority choice in the current context. In addition, stocks with high dividend rates also deserve attention after recent adjustments.
One of the key factors for Vietnam to be upgraded is the completion of the technical infrastructure system. Currently, the KRX system is in the testing phase, expected to be operational in May 2025. This is the platform to operate new mechanisms such as T+0 transactions, clearing payments according to international standards - meeting the conditions of FTSE and MSCI on upgrading.
Foreign capital is ready to return, the upgrading effect is becoming increasingly clear
According to SSI Research, the Vietnamese stock market has every basis to be upgraded to the "secondary emerging" group in the FTSE Russell review in September 2025.
SSI experts said that stakeholders such as Securities Depository and Clearing Corporation (VSDC), securities companies, deposit banks and institutional investors are closely coordinating to complete related procedures.
Ms. Le Thi Le Hang - Strategy Director of SSI Securities Joint Stock Company - said that in a favorable scenario, Vietnam will be upgraded in September 2025 and officially enter the emerging market index basket in March 2026. The upgrade by FTSE will also be a premise for MSCI to consider upgrading in the future.
Although we cannot expect cash flow to flow in immediately, in the long term, the cash flow will gradually flow in more, Ms. Hang emphasized.
Preliminary estimates show that capital flows from ETFs in the FTSE Emerging Markets Index alone could reach $1.7 billion.Meanwhile, FTSE Russell assesses that total assets from active funds can be 5 times more than ETF funds, showing that there is still a lot of room to attract capital flows.
Mr. Huynh Minh Tuan - Chairman of FIDT Joint Stock Company - commented that FTSE is expected to officially announce the upgrading of the Vietnamese stock market to emerging market type 2 in the next assessment period and apply it effectively after one year, in September 2025. According to Mr. Tuan, the event of "upgrading" not only helps improve the ability to attract capital but also creates a buzz and great attention from the regional financial community.
However, he also noted that: Long-term capital attraction must still be based on a market foundation, attractive valuation and sustainable profit quality. The upgrade can create a short-term effect, but more importantly, it improves goods in the market and enhances transparency".
The market upgrade is not only a turning point in attracting indirect investment capital but also a driving force for the market to continue reforming, perfecting institutions, and improving the quality of listed enterprises. This is an opportunity for the Vietnamese stock market to enter a new revaluation cycle, with prices approaching the long-term average.
