Macro/ Strategy

Macroeconomic outlook

We believe Vietnam's economy will adapt to the new situation as the U.S. imposes reciprocal tariffs on countries worldwide. In all scenarios, these U.S. tariffs could impact Vietnam's import-export growth. While export pillars may not maintain their historical growth momentum, we expect Vietnam's economy to continue growing based on its internal strength. Given the results achieved in the first four months of the year, we estimate that GDP for 2025 could reach a growth rate of over 6%, inflation will be controlled below 4%, and the VND may continue to depreciate by another 2-3%.

Stock market outlook

Even with the headwinds from the global economy, the Vietnamese stock market holds substantial promise. Recent sharp pullbacks have opened doors to acquire stocks at attractive valuations. A clear positive is the resurgence of foreign investment in May, following a period of outflows, indicating a notable turnaround. Additionally, the potential upgrade to an Emerging Market by FTSE in September 2025 serves as a significant catalyst for market growth.

Besides this, the stock market will be driven by the internal strength of the economy, with estimated earnings growth for listed companies reaching nearly 15% in 2025. The target P/E is 12x, corresponding to a reasonable range for the VNIndex of 1,380. In a positive scenario, we expect the VNIndex to approach its old peak of 1,500 points (target P/E 13x, -1 standard deviation from the 10-year average).

Potential Sectors

Our investment strategy for the second half of 2025 centers on three key thematic stock groups: (1) Export group, (2) Domestic group, and (3) Stocks benefiting from emerging market upgrade. For the export theme, we're selecting companies with inherent competitive strengths and the agility to capture new investment flows. Within the domestic theme, we're honing in on sectors that will thrive from government policies stimulating local demand and increased public investment. Lastly, our preference for the upgrade theme is for large-cap companies well-positioned to attract significant foreign capital if the market status improves.