Vietnam stock market outlook for H2 2025: What’s behind the optimism?

A key variable to watch is the upcoming tariff policy announcement on August 1, which could significantly influence market psychology. The recent gains of the VN-Index have partly been fuelled by positive expectations surrounding this policy.

Macro Fundamentals Supporting the Rally

According to Ms. Dang Nguyet Minh, CFA, Head of Research at Dragon Capital, the optimism is underpinned by solid macroeconomic fundamentals. Vietnam’s GDP grew by 7.5% in H1 2025 — the highest first-half growth in a decade — driven by manufacturing, public investment, and 9.9% credit growth, which supported production, business activity, and consumption.

Ms. Minh also noted that the administrative reform, reducing provincial-level units from 63 to 34, and legal and institutional reforms have enhanced government agility and boosted investor confidence, particularly in the private sector.

“Vietnam is pushing forward legal reforms to strengthen competitiveness and financial stability. The amended Law on Credit Institutions grants commercial banks more flexibility in handling bad debts and expands the State Bank of Vietnam’s authority in managing systemic risks,” she said.

In digital finance, the government is finalizing a regulatory framework to recognize digital assets and cryptocurrencies as separate asset classes — expected in January 2026. Plans to develop international financial centers in Ho Chi Minh City and Da Nang are also underway, aiming to position Vietnam as a regional financial hub.

Reforms in the real estate and construction sectors, such as eliminating construction permit requirements, are expected to shorten approval timelines and lower costs — improving the business environment.

On July 3, former U.S. President Donald Trump announced a preliminary trade agreement with Vietnam. Vietnamese exports will face a 20% tariff, which is significantly lower than those applied to Bangladesh (35%), Thailand (36%), or Indonesia (32%). Though some issues remain — such as the treatment of transshipped goods — the current rate is more favorable than the initially proposed 46% and is projected to reduce GDP impact to just 1.4–2%.

The favorable differential strengthens Vietnam’s position as a competitive and stable manufacturing hub. This clarity has boosted confidence in export-related stocks, industrial real estate, and financial services, while defensive sectors like energy have seen outflows amid lower oil prices and rising market sentiment.

In USD terms, the VN-Index rose 3.1% in June and 6.9% year-to-date, reaching its highest level in three years, fueled by optimism around tariff clarity.

Strong H2 2025 Outlook

Viet Dragon Securities (VDSC) projects the VN-Index could reach 1,513–1,756 in the next 6–8 months — a 6%–23% increase from the closing level on July 9, 2025.

VDSC estimates EPS growth of 15%–22% in 2025. Using a top-down approach (based on GDP, credit growth, and profit margins), EPS is forecasted at 113.8 VND/share (15.3% YoY). A bottom-up analysis, aggregating forecasts across companies, suggests EPS growth could reach 21.6% YoY.

As a result, VDSC has raised its target P/E range to 13.3x–14.7x (from 13.5x–14.5x) to reflect supportive factors such as accommodative monetary and fiscal policies, and the potential for an upgrade in market classification in FTSE’s September 2025 review.

Vietnam’s stock market is edging closer to being upgraded to “Emerging Market” status. In FTSE Russell’s March 2025 review, the emphasis was on improving trading and account opening mechanisms for foreign investors.

In response, the Vietnamese government has introduced new regulations including Circulars 18 and 03 in 2025 (following Circular 68/2024), and officially launched the KRX trading system in May 2025. If the upgrade materializes, Vietnam could attract USD 1 billion from global benchmark funds, boosting liquidity and valuations.