2024 was a year of ups and downs for the Vietnamese stock market, but it still managed to achieve an impressive 12.11% growth.
Alongside the rise of the VN-Index, the Vietnamese economy also showed a strong recovery, with a remarkable 7.09% GDP growth rate in 2024, surpassing the government’s target. Listed companies’ profits are estimated to have grown by approximately 20% in 2024, reflecting the rebound in production and business activities across the economy.
Looking ahead, Agriseco Securities forecasts that the VN-Index will reach a high of around 1,450 points in the latter half of 2025. This prediction is based on an expected 18-20% growth in market-wide profits in 2025, with a reasonable P/E ratio of 13-14.
Vietnam’s economic growth is projected to outpace that of its regional peers. The country’s GDP is forecast to grow between 6.5% and 7% in 2025, higher than that of other countries in the region. This aligns with the government’s goals set at the beginning of the year, thanks to improved domestic consumer demand, sustained growth in industrial production, increased public investment, a recovering real estate market, and sustained FDI inflows, including high-tech projects.
While the trade balance will remain positive, the surplus is expected to be lower compared to the previous high base period and the impact of the Trump 2.0 trade war. The government has set a GDP growth target of 6.5-7% for 2025, striving for a range of 7-7.5%.
Profit growth is a key driver of capital inflows into the stock market. In 2024, market profits are estimated to have grown by about 20%, with core profits increasing by approximately 15%. As a result, Agriseco Research predicts a further 18-20% increase in the earnings of listed companies in 2025, driven by the Consumer, Banking, and Real Estate sectors.
After a record net sell-off of more than VND 90,000 billion in 2024, foreign capital is expected to turn more positive in 2025.
As inflation continues its downward trend and central banks worldwide approach their inflation targets, the global labor market is regaining balance. This environment enables central banks to continue their path of lowering interest rates. Currently, about 70% of the world’s central banks have decided to cut rates, and M2 money supply growth is recovering after the tight phase of 2022-2023.
In the US, the Fed began lowering interest rates in 2024 and is expected to maintain this trajectory in 2025. However, the pace of rate cuts in 2025 may slow due to better-than-expected economic data and a potential uptick in inflation driven by public debt and import tariffs.
According to CME Group, the US is expected to cut rates twice in the coming year, bringing them down to 3.75% – 4%. Europe is also forecast to lower rates amid a challenging economic outlook and weak manufacturing sector performance. China is expected to reduce lending rates to support consumption and the real estate market.
In 2024, global investment flows noticeably favored the US. US stock indices such as the Dow Jones and S&P 500 surged to new highs, driven by the technology sector. The valuations of these indices have also been on a consistent upward trajectory and are currently hovering around their all-time highs.
As a result, global investment flows may no longer view the US stock market as particularly attractive in 2025, leading to a potential shift towards frontier and emerging markets, including Vietnam.
Several organizations predict that Vietnam will be considered for an upgrade to emerging market status by FTSE during 2025, with potential inclusion in the second half of the year. This upgrade could attract an estimated $5-6 billion in investment funds from FTSE-referenced ETFs.
Currently, the VN-Index is trading at a P/E of ~13 and a P/B of ~1.7, both of which are lower than the market’s 5-year average. Over the last five years, the average P/E has been ~14.5, and the P/B has been ~2.0. Notably, the VN-Index’s current P/B is just below one standard deviation, placing it in the lowest range over the past five years.
With a current P/E of ~13.3, the VN-Index is one of the most attractively valued markets in the region, especially when considering that Vietnam’s market ROE is higher than the regional average. Agriseco emphasizes that the Vietnamese stock market is trading at a relatively attractive valuation.
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