Nguyen Minh Hoang, Director of Analysis at Nhat Viet Securities Company (VFS), believes that 2025 will continue to be a promising year for Vietnam's stock market thanks to the ongoing recovery of the domestic economy.

According to Mr. Nguyen Minh Hoang, with a GDP growth target of 6.5% - 7%, the government’s policy direction remains focused on maintaining flexible and accommodative economic measures, creating favorable conditions for economic and financial market development. Concurrent efforts to stabilize the exchange rate and monetary market will help foster positive investor sentiment.

Additionally, the anticipated upgrade of Vietnam’s stock market to emerging market status is expected to attract billions of dollars in capital flows from both active and passive investment funds, significantly improving liquidity and supporting sustainable growth. Individual investors are also expected to return to the market as alternative investment channels become less appealing, setting the stage for a new growth cycle after a period of consolidation.

In 2025, major central banks, particularly the U.S. Federal Reserve (FED) and the European Central Bank (ECB), are expected to maintain accommodative monetary policies. This will create opportunities for foreign capital to flow back into Vietnam while low capital costs will help domestic enterprises expand production and investments.

China's economic recovery to support key sectors

According to Mr. Nguyen Minh Hoang, China's economic recovery, especially in the real estate sector, will significantly benefit Vietnam’s industries, such as steel and construction, due to the strong trade ties between the two countries. Export-oriented industries, including seafood, rubber, agriculture, and textiles, are also expected to reap substantial benefits.

“However, the U.S.-China trade tensions remain a major challenge. Should China devalue the yuan to boost exports, Vietnam's exchange rate could face pressure, affecting competitiveness and macroeconomic stability,” Mr. Hoang noted.

Vietnam's fiscal policies and public investment boost

Domestically, the Vietnamese government will continue tax incentives and address legal bottlenecks to support sectors such as securities, real estate, and public investment, thereby driving economic growth.

“Public investment will be accelerated, particularly in energy, transportation, and logistics sectors, to stimulate short-term demand and address infrastructure shortages. Public investment capital in 2025 is expected to reach VND 790 trillion. Inflation is forecast to remain between 3.4% and 4%, lower than the government's 4.5% target. However, exchange rate volatility remains a concern, especially if global trade tensions escalate under a potential Donald Trump administration, leading to a stronger U.S. dollar,” Mr. Hoang added.

Stock market upgrade and structural improvements

The Vietnamese stock market is expected to be upgraded to emerging market status by MSCI or FTSE Russell in 2025. This upgrade will be facilitated by the amended Securities Law, which comes into effect at the beginning of 2025. The revised law includes regulations on payment systems and allows the Vietnam Securities Depository (VSD) to establish subsidiaries to implement a Central Counterparty Clearing (CCP) mechanism. This will enable foreign investors to settle transactions on a T+2 basis without requiring a 100% cash margin, addressing key barriers to market upgrades.

Positive outlook for 2025

Mr. Nguyen Minh Hoang believes that Vietnam's stock market has been relatively stable over the past two years, with valuations remaining reasonable. Given the limited appeal of other investment channels, such as gold and real estate, capital inflows into the stock market are expected to increase, driving growth in 2025.

VFS maintains a positive outlook for the stock market in 2025. With GDP growth projected at 6.5% - 7%, the earnings of listed companies are anticipated to grow by 14% - 17%, supporting higher stock valuations.

“The VN-Index reaching 1,300 points is achievable in 2025, with forward price-to-earnings (PE) ratios expected to rise from the current 11x to around 13.5x, in line with historical averages. Investment returns from the VN-Index could range between 10% and 18%, with market liquidity projected to grow 15% - 20%, reaching VND 18-20 trillion per day, driven by market upgrades, T+0 settlement mechanisms, and the return of foreign capital,” Mr. Hoang explained.

In July 2024, VFS will launch the "VFS Expert" program to enhance financial investment knowledge in collaboration with market experts.

For more details, visit: https://vfsinvest.vfs.com.vn/home/VFSExpert

Source: Nhat Viet Securities Company (VFS)