MARKET INSIDER – For investors tracking emerging markets, Vietnam’s stock market has been a compelling story, characterized by both rapid growth and occasional sharp volatility. Following a significant market downturn, Dragon Capital, a major fund manager in Vietnam, has reaffirmed its positive long-term outlook and issued three crucial recommendations for investors.
The recent market movement saw the VN-Index drop by over 94 points (-5.47%) on October 20th, before recovering to 1,683 points by the close on October 24th. This episode, while dramatic, is viewed by Dragon Capital as a common feature of the market, not a change in its fundamental trajectory.
Volatility is Normal, Growth is the Trend
Analyzing historical data, Dragon Capital highlights that sharp, single-session declines are not rare. Statistics show the VN-Index has dropped by more than 4% in a single session 20 times between 2020 and the start of Q4 2025. Crucially, despite this volatility, the market still finished the year with over 12% growth in four of those years.
Even with three separate single-day drops of over $5% year-to-date, the VN-Index remains up $32.5% since the start of the year. This resilience demonstrates that short-term swings haven’t altered the long-term upward trend. The index has maintained its positive momentum since 2020, navigating major global and domestic challenges including the COVID-19 pandemic, the Russia–Ukraine conflict, the Fed’s monetary tightening cycle, and domestic bond market instability.
The Power of Discipline and Long-Term Holding
The fund manager’s own performance supports the case for a long-term approach. Dragon Capital’s equity funds (DCDS and DCDE) have seen superior returns compared to the market during this period. An analysis of the DCDS fund data reveals that investments held for more than 24 months have yielded an average annual return ranging from 18% to 34%, figures competitive with many other asset classes.
Furthermore, a simulation of a systematic, regular monthly investment strategy—the “disciplined investor” approach—over a 10-year period (up to June 2024) showed a compounded annual gross return (IRR) of 14.8%. This result is nearly on par with a hypothetical “prophetic investor” who somehow knows in advance when the market will rise and only buys right before the upswing.
This data underscores a vital lesson: regular investment and long-term holding can deliver positive returns even amid market turbulence. Conversely, succumbing to the impulse to panic-sell during corrections is often the reason investors miss out on significant long-term wealth accumulation opportunities.
Vietnam’s Next Growth Phase and Attractive Valuation
Dragon Capital is highly optimistic about Vietnam’s future, anticipating the country is entering a new, high-growth phase driven by clear government policies aimed at achieving double-digit growth. Historical parallels with economies like South Korea, Taiwan, and China suggest that when GDP growth sustains double-digit rates over multiple years, the stock market can see multi-fold, not just percentage, increases.
Despite the VN-Index recently crossing the 1,700-point mark, the market’s valuation remains appealing. The forward Price-to-Earnings (P/E) ratio is projected to be only about 12.5–13 times for 2025 and dropping to 11 times for 2026. This is significantly lower than many regional peers, especially considering Vietnam’s impressive earnings growth trajectory. In history, countries with GDP growth exceeding 10% often saw their stock markets trade at P/E ratios of 20–25 times, or even over 30 times. Against this backdrop, market corrections of 5%–10% are considered perfectly normal before the market continues its upward climb.
Three Key Recommendations for International Investors
Based on this perspective, Dragon Capital maintains its positive view on a long-term investment strategy and offers three core pieces of advice for investors:
- Stay Persistent with Long-Term Holding: Remain committed to long-term ownership to aim for superior returns.
- Utilize Market Corrections: Take advantage of market dips and corrections as opportunities to accumulate additional stocks.
- Limit Short-Term Trading: Avoid excessive short-term trading, which often consumes time and effort without delivering superior returns compared to a steady, long-term holding strategy.
