Stock market enters selective phase driven by earnings quality

On May 28, Viet First Securities Corporation (VFS) hosted a seminar, where experts noted that Vietnam’s stock market is entering a phase increasingly driven by earnings quality and business fundamentals rather than expectations alone. As market divergence deepens, companies with strong financial foundations and sustainable competitive advantages are expected to emerge as key beneficiaries.

Dr. Can Van Luc, chief economist at BIDV, said Vietnam’s economy is entering a new phase in which growth quality and sustainability are taking precedence over the singular pursuit of GDP expansion.

According to Luc, the 2026-2027 period will continue to benefit from several key growth drivers, including a recovery in consumption, improving private-sector investment, resilient foreign direct investment inflows, and ongoing global supply chain relocation trends.

“Under our base-case scenario, Vietnam’s GDP growth could reach around 9-9.2 per cent in 2026, while inflation is expected to remain under control at approximately 4.2-4.7 per cent,” Luc said. “However, external risks such as geopolitical conflicts, technology-related trade tensions, global inflationary pressures, and energy security concerns could still weigh on both the economy and financial markets.”

Against this macroeconomic backdrop, Nguyen Minh Hoang, head of Research at VFS, noted that Vietnam’s stock market underwent a significant correction from late August 2025 to the end of March this year, with valuations falling to levels that had already priced in most macroeconomic risks.

According to Hoang, the VN-Index declined 16.38 per cent from its most recent peak to the point when tensions in the Middle East escalated, while many sectors experienced average corrections of approximately 26 per cent.

“Recent developments suggest that market conditions are changing. The VN-Index has recovered to its previous peak, supported by large-cap stocks, particularly the real estate sector, which has risen more than 52 per cent. At the same time, most sectors have stopped declining and are beginning to establish recovery trends, indicating that the market is transitioning from a correction phase into an accumulation phase that could lay the foundation for a new growth cycle,” said Hoang.

“In terms of valuation, the VN-Index is currently trading at around 13.8 times earnings. Excluding Vingroup and Vinhomes, the market's price-to-earnings (P/E) ratio stands at only 11.6x, significantly below the 10-year average of 15.2x. Assuming listed companies achieve after-tax profit growth of around 16-17 per cent in 2026, the VN-Index could potentially reach 2,100 points, equivalent to a P/E ratio of approximately 15.3x, which would still remain below the market peak recorded in 2021,” he added.

VFS believes credit growth will remain one of the market’s most important catalysts in the coming period.

“With a credit growth target of 15 per cent in 2026, new capital injected into the economy could reach approximately $110.4 billion, significantly exceeding the scale of public investment disbursement. However, capital flows are expected to become increasingly selective, favouring sectors with stronger capital absorption capacity, including manufacturing, energy, public investment-related projects, and commercially viable real estate developments,” Hoang said.

Nguyen Minh Hoang, head of Research at VFS

Beyond credit growth, VFS highlighted the disbursement of approximately $40 billion in public investment and Vietnam’s anticipated market upgrade by FTSE Russell in September as two major drivers likely to support market liquidity.

Based on these factors, Hoang asserted that investment opportunities will increasingly concentrate in market leaders that stand to benefit from multiple structural tailwinds while attracting institutional capital.

“These include large private-sector groups such as Vingroup, Gelex and Masan; banks benefiting from credit growth and capital raising; construction, building materials and real estate companies benefiting from public investment; as well as securities firms poised to gain from improving liquidity and the market upgrade story,” he said.

The market’s growing divergence is also clearly reflected in the first-quarter earnings results of listed companies.

According to Do Hong Van, head of Data Analytics, Financial Information Services Division at FiinGroup, the market is gradually shifting from a phase driven by expectations to one increasingly supported by earnings quality and operational efficiency.

“While first-quarter earnings growth appeared strong on the surface, it remained highly concentrated. Excluding the contributions of major companies such as Vinhomes, Binh Son Refining and Petrochemical, Hoa Phat Group, Vinpearl, aggregate earnings growth across listed companies would have been only 15.4 per cent, substantially lower than the reported 38.4 per cent,” she said. “This indicates that capital is currently concentrated in a limited number of sectors and market-leading companies, rather than being broadly distributed across the market as seen in previous cycles.”

According to Van, large-cap stocks are likely to regain their role as market leaders, supported by growth drivers from the banking sector, steel producers and the broader Vingroup ecosystem. Meanwhile, mid-cap and small-cap companies could face greater challenges as funding costs rise, interest rates trend higher and demand recovery remains slower than expected.

“The Vietnamese stock market is entering a stage where the quality of corporate growth will play a decisive role in attracting capital flows. Companies with healthy balance sheets, sustainable earnings growth, and direct exposure to public investment, credit expansion and institutional reforms will be best positioned to lead the market going forward,” she said.

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