VN-Index Hits Record High, Surpassing 1,700 Points for the First Time

The stock market opened on September 5th with a positive sentiment, as the VN-Index gained nearly 13 points after the ATO session, surpassing the 1,700-point mark for the first time. Just a few months ago, this number was unimaginable even for the most optimistic investors. However, the upward momentum since the tariff-related lows in mid-April has created one of the most exuberant periods in the history of Vietnam’s stock market.

Profit-taking pressure at the peak after a strong rally is inevitable. At the moment, it is difficult to predict how the VN-Index will perform in the short term. However, it is undeniable that the stock market is currently benefiting from several favorable factors: (1) A low-interest-rate environment; (2) Government measures to boost economic growth; (3) Clear prospects for market upgrade…

According to a recent analysis by HBSC, Vietnam has met 7 out of 9 criteria in the FTSE’s “Market Quality” framework. Quantitative criteria such as market capitalization, liquidity, and the presence of large-cap stocks have been achieved. The remaining two criteria related to the settlement mechanism and transaction costs, which previously led to an “Limited” rating from FTSE, have also shown progress.

Commenting on the market trend, Mr. Nguyen Duc Khang, Head of Analysis at Pinetree Securities Joint Stock Company, stated that the current global macroeconomic landscape does not exhibit significant fluctuations. As a result, the driving force behind this year’s rally can be entirely attributed to domestic capital inflows.

“The market wave this year is quite similar to that of 2017 and 2021. In 2017, the driving force was strong buying pressure from foreign investors, while in 2021, it was the influx of new individual investors,” the expert evaluated.

At the 1,700-point level, the VN-Index is trading at a P/E of ~16.2 times. The P/E ratio for banks is around 11.6 times, while for non-financial companies, it is over 19 times. This P/E ratio of over 16 times was only achieved in the 2023-2024 period and is still much lower than in 2017 (over 24 times) and 2021 (over 26 times).

The expert excluded the 2021 period as the P/E at that time was abnormally high due to the impact of the Covid-19 pandemic on corporate profits. Additionally, there is still room for growth in the banking sector, which could continue to provide a boost for the VN-Index in the future.

According to Mr. Khang, the current P/E of the market is even lower than in April 2024 and October 2023, yet the index level is significantly higher. This reflects the continued growth in corporate earnings.

Following the market’s strong performance, many large organizations and analysts have predicted that the VN-Index could reach 1,800 points this year and potentially go even higher in the near future.

In a recent assessment, Mr. La Giang Trung, CEO of Passion Investment, stated, “Compared to the 2020-2021 period, the stock market is witnessing even stronger capital inflows, while valuations remain relatively modest.

“Capital inflows and liquidity have doubled or tripled compared to the previous cycle of 2020-2021, and the market valuation has only reached the halfway point. The VN-Index will surpass all imaginable scenarios and continue its upward trajectory,” emphasized the expert.

Mr. Trung also believes that while corrections are normal in an uptrend, it is unlikely to occur in September. The market has risen significantly in terms of index levels but not in duration since the April lows. In reality, during the 2016-2018 period, the VN-Index doubled before witnessing a correction of more than 10%. Currently, since the April lows, the market has risen by less than 50%. If the market follows a similar pattern to 2016-2018, there is still room for further gains.