Attractive valuations open up opportunities across multiple stock sectors

Compared with price levels at the outset of the year, shares across many sectors are now trading at significantly lower levels. Opportunities are emerging in sectors with strong fundamentals and those benefiting from long-term structural trends.

During the stock market correction in July, only a limited number of sectors managed to maintain positive performance. In contrast, July saw deep corrections across a broad range of sectors, bringing the valuation levels of many ticker groups significantly below their historical averages.

Data provided by Tien Phong Securities Corporation shows that, following the correction period, as many as 13 sectors are trading at price-to-earnings (P/E) ratio and price-to-book (P/B) ratios below their five-year averages.

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The market discount is no longer concentrated in just a few sectors but has broadened across a relatively wide range of groups, including banking, financial services, food and beverages, industrial goods and services, IT, construction and building materials, retail, travel and leisure, among others.

The developments in July reflected cautious investor sentiment. The fact that valuations across most sectors have been discounted to below historical averages is creating a more attractive safety margin for medium- and long-term investors, as Vietnam's macroeconomic fundamentals remain positive, the economic growth outlook has been revised upward by a number of international institutions, and the process of upgrading the market's status is gradually turning into a reality.

As of early August, the VN-Index was trading at a P/E of 11.9x and a P/B of 1.9x, significantly below the 10-year averages of 15.35x and 2.18x, respectively.

Excluding the impact of Vingroup JSC, the market's adjusted valuation falls to just 9.9x P/E and 1.6x P/B – levels comparable to those seen during some of the most stressful periods, such as the Covid-19 pandemic and the corporate bond crisis in 2022.

TPS said current valuation levels have already priced in most of the adverse factors in the global investment environment, as well as the impacts related to tariff barriers.

The combination of stable macroeconomic fundamentals and deeply discounted valuations is creating an attractive risk-reward profile for medium- and long-term strategies.

At the same time, current valuation levels also give the market greater resilience against short-term fluctuations stemming from the external environment.

According to analysts at SSI Securities Corporation, earnings growth remains an important pillar supporting the market. However, in the second half of 2026, growth may slow as favourable base effects fade and high capital costs begin to exert a clearer impact on business operations.

On the positive side, as market valuations become more attractive, the market-upgrade story continues to be an important medium-term catalyst, with the full implementation process will be carried out in phases through September 2027.

In fact, stocks that stand to benefit from the market upgrade are also among the notable investment themes. On August 21, the list of Vietnamese stocks included in the FTSE Emerging Markets Index shall be announced.

At the corporate level, business results in the second quarter of 2026 continued to maintain their growth momentum, with most sectors posting double-digit growth.

Banking and real estate continued to make the largest contributions, with net profit in the second quarter of 2026 among HSX-listed companies rising 24.6 per cent and 232 per cent, respectively, on-year.

Other sectors that recorded strong profit growth in the first quarter and continued to maintain positive momentum in the second quarter included retail, utilities, oil and gas, construction materials, and fertilisers.

In the short term, as interest-rate pressures have yet to ease significantly and the profit outlook for the second half of 2026 may be less robust than in the first half, investors should continue to exercise caution.

Accordingly, SSI experts believe an appropriate strategy is to shift the focus towards selecting positions by sector and stock, prioritising groups benefiting from expanded production capacity and infrastructure investment, such as industrial parks, logistics, power, construction materials, and infrastructure contractors; making selective investments in the banking sector; and maintaining exposure to consumer stocks as a defensive segment.

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