Blue-chip dominance lifts the VN-Index to historic levels as global funds debate whether growth, not valuation, will fuel the next leg
MARKET INSIDER- Vietnam’s stock market ended 2025 with a landmark close, but the headline record masks a more nuanced—and globally relevant—investment story. On December 31, the VN-Index surged nearly 1% to 1,784.49 points, its highest-ever closing level, while total market capitalization on the Ho Chi Minh Stock Exchange surpassed VND 8.3 quadrillion for the first time. For international investors, the milestone underscores Vietnam’s growing weight in emerging-market portfolios—yet also raises questions about sustainability beneath the surface.
The rally was overwhelmingly driven by large-cap concentration. Shares linked to Vingroup—including VIC, VHM, VPL, and VRE—accounted for more than 15 points of the index’s year-end gain, while stocks associated with billionaire Nguyen Thi Phuong Thao, notably HDB and VJC, added another four points. The result was a classic late-cycle pattern seen in global markets: indices pushing to new highs on the back of a narrow leadership cohort, rather than broad-based participation.
Foreign capital flows offered a tentative but important signal. After months of persistent net selling, overseas investors returned as net buyers in December, purchasing nearly VND 1.7 trillion worth of shares on HoSE. While modest by historical standards, the reversal matters psychologically, reinforcing Vietnam’s re-emergence on the radar of global funds searching for growth exposure beyond China and India.
Valuation dynamics, however, suggest that 2026 will be driven more by earnings than by multiple expansion. According to MB Securities, the VN-Index was trading at a P/E of 15.8x as of December 25—around 16% above its three-year average, but still well below the 2021 peak of 21x. Strip out the impact of VIC, and the market’s P/E falls to roughly 13.5x, close to estimated 2025 averages. In other words, Vietnam is no longer “cheap,” but neither is it stretched by emerging-market standards.
Looking ahead, MBS projects a constructive but uneven 2026. The firm expects the VN-Index to reach 1,860 points in the first half of the year, before moderating as higher interest rates reshape liquidity and capital rotates toward the real economy. By year-end 2026, the index is forecast to trade in a 1,670–1,750 range, assuming profit growth of 16–17% among listed companies. The implied message is clear: stock selection, not index chasing, will define returns.
Long-term investors remain notably upbeat. Dragon Capital points to Vietnam’s strong macro fundamentals—high GDP growth, controlled inflation, and a rising private sector—as durable drivers of corporate earnings. PYN Elite Fund, led by Petri Deryng, goes further, arguing the VN-Index could reach 3,200 points within three years if profit growth sustains at 18–20% annually. That optimism is reinforced by Vietnam’s capital-market reforms, including its recent upgrade by FTSE Russell and the prospect of eventual inclusion by MSCI.
For global investors, Vietnam’s record close is less an endpoint than a transition. The era of easy valuation gains appears over; the next phase will reward discipline, earnings visibility, and balance-sheet strength. Whether Vietnam’s market can broaden beyond its blue-chip champions may determine if 2025’s historic high becomes a ceiling—or merely a base for the next decade of growth.
