Vietnam stock market outlook for 2H26

The Vietnam stock market experienced sideway drifts and modest contraction in 1H26, with price movements divided into two main phases. Phase 1 lasted until near the end of 1Q26, with the market trading sideways in the first two months before plummeting from late February, hit by the US-Iran hostilities. Phase 2 ran from late 1Q through the end of 2Q, with the market rebounding but showing clear divergence as investors awaited the outcome of US-Iran negotiations alongside momentum from a sharp rally in Vingroup stocks. For 1H26, the VN-Index dropped 4.2% in point compared to the end of last year, while matched order trading value grew 34% YoY.

The easing of Middle East tensions, which has had far-reaching implications for both the international and Vietnamese macro-environments, combined with a few macro-bright spots and fruitful corporate earnings, made our forecasts more optimistic than the 2Q strategy report.

KBSV revised its projection for 2026 market-wide EPS growth up to 25% YoY, reflecting VIC's planned NPAT growth of 200% (VND35,000 billion). Excluding this one-off surge from VIC, EPS growth will be at 14% YoY, contributed by several large-weighted groups: Materials (40% YoY), consumer discretionary (18% YoY), and financials (14% YoY). This growth level implies our expectations that the Government is actively driving growth and concentrating resources on developing core business sectors as sustainable growth pillars of the economy.

In 1H26, the conflict that erupted in the Strait of Hormuz created an energy shock that upended all prior macro forecasts. However, in 2H26, KBSV expects the investment environment to become more favorable as major risks cool down and no new shock strong enough to change market trends emerge. Less geopolitical tensions and more stable energy prices will help bring capital flows back to the stock market.

“Policy management will focus on accelerating public investment disbursement, unblocking private sector capital flows, attracting FDI while maintaining the balance between growth targets, inflation control, and exchange rate stability. Given less inflationary and exchange rate pressure, we expect the State Bank of Vietnam (SBV) to be more flexible in managing monetary policy to support growth. We believe deposit interest rate levels have already peaked and will remain high through 3Q before gradually falling from the beginning of 4Q as system liquidity improves alongside boosted public investment and narrowing gap between deposit and credit growth”, said KBSV.

The VN-Index P/E currently stands at 15.1x (according to Bloomberg), marginally below the most recent five-year average of 16.1x. However, the surge in Vinfamily stocks since the beginning of 2025 means this P/E level does not fully reflect the valuation of the majority of stocks on the market (the two stocks VIC and Vinhomes - VHM alone have contributed 450 points to the VN-Index's gain since the beginning of 2025, and VIC's P/E is currently trading at 140x).

Accordingly, to better assess the current valuation zone of the VN-Index, KBSV  recalculated the market P/E (hereafter referred to as the adjusted P/E) assuming the P/E of the Vingroup stocks remains unchanged from the beginning of 2025 (in other words, price movements in this group move in line with trailing fourquarter earnings). The result shows this metric currently stands at 11.2x, not far from the Covid trough in March 2020 (at 11.3x), the 2022 trough (at 11.01x), and the tariff trough in 2025 (at 11.6x).

Regarding the market outlook for 2026, with its assessment that deposit interest rate levels will gradually ease in 2H26 while listed company earnings continue to grow strongly, KBSV maintained its fair value zone forecast for the VN-Index at 1,950 points, as stated in its most recent report, representing 5% upside from current levels:

Market-wide EPS growth is projected to reach 25% in 2026 (revised up from 11% in our most recent report), driven by expectations for the Government's economic stimulus policies, a sharp decline in oil prices as the Middle East conflict cools, and a surge in VIC earnings.

KBSV expects the fair P/E for the VN-Index at the end of the year equivalent to the current level of 15.1x. Actual data shows that most bluechips on the exchange (excluding the Vin-family stocks) are trading at attractive levels relative to earnings growth. The adjusted P/E currently stands at 11.2x, equivalent to the trough levels of 2020, 2022, and 2025, reflecting attractive growth potential when domestic macro risks ease.

However, KBSV has not yet raised the VN-Index's target P/E amid international macro environment uncertainties, while the elevated valuations of Vingroup stocks also carry downside risk if a corrective trend emerges in this group.