Foreign investors return to net buying, stock market expected to flourish

Ms. Bui Thi Thao Ly, Director of Research Department, Shinhan Securities Vietnam (SSV)

What do you think about Vietnam's economic situation this year?

In 2025, the Government set a growth target of over 8% and to achieve this target, the public investment budget has been adjusted to increase by 38% compared to 2024. The credit growth target for the whole economy has also been raised to 16%, higher than the usual level in previous years. To create space for economic expansion, the inflation target has been raised accordingly, from 4.5-5%.

We believe that the Government will be determined to promote the disbursement of public investment capital to support economic growth. Tariffs only directly affect exports and foreign investment, thereby affecting production and consumption. In the baseline and positive scenario, we estimate that GDP growth will reach the average level of the economy (6-7%/year), challenging the growth target of 8%.

Reciprocal taxes have not yet impacted Vietnam's economy in the first five months of 2025, and import-export activities have even grown strongly thanks to the move to increase imports of goods before the effective date of the tariffs, putting pressure on the exchange rate as demand for USD increases.

Madam, will inflation and rising exchange rates make it difficult to maintain a low interest rate environment?

The exchange rate is currently under pressure as the domestic USD price moves in the opposite direction to the world price, despite the USD Index falling more than 8% since the beginning of the year. In addition, the US has entered the war in Iran, raising concerns about the conflict between Israel and Iran, pushing oil prices up sharply, causing inflation to escalate.

If exchange rates and inflation increase sharply, it will be very difficult to maintain expansionary monetary and fiscal policies and the current low interest rate environment. This will be a major challenge in managing monetary policy in the second half of the year.

With the reciprocal tax shock on April 2, the VN-Index fell more than 20% in just a few sessions, but has impressively recovered to the pre-decline level after nearly 3 months. What is the market outlook for the coming time?

The cautious sentiment is still prevailing in the state of waiting for the results of tariff negotiations, the score and liquidity have not broken out. VN-Index is trading at a P/E ratio lower than -1 standard deviation compared to the 10-year P/E average, opening up opportunities for the Index to continue to increase, when there are boosts from events, such as positive results of reciprocal tariff negotiations, Vietnam being upgraded to emerging market status in September 2025.

KRX officially operated from May 5, 2025, the leverage ratio continuously increased. However, market liquidity in May and June decreased slightly, partly reflecting caution. The positive point is that customer deposits at securities companies showed signs of recovery in the first quarter of 2025 and the margin lending space of securities companies is still very large. Many industry groups are still in attractive valuation areas and have growth momentum such as real estate, basic resources, electricity and water, petroleum, gas, chemicals, etc.

How is foreign money flow in the market now?

Foreign investors returned to net buying in May 2025 after a series of net selling since the beginning of 2024, mainly due to the pressure from the net withdrawal of ETF funds. In the first half of 2025, foreign investors net sold about 1.6 billion USD.

The roadmap for upgrading to an emerging market continues to be strengthened with the implementation of non-prefunding solutions, removing difficulties in opening accounts for foreign investors, and the official launch of KRX, creating a foundation for the operation of the CCP system. We expect that, after a period of consultation with foreign institutional investors, Vietnam will be upgraded to an emerging market by FTSE in September 2025 and by MSCI at the earliest in 2026.

With a cautious view, we expect that the reasonable valuation zone for VN-Index is around 1,380 points, corresponding to P/E 12x and EPS growth of listed companies at 14% in the base scenario. VN-Index is forecasted to trade around 1,200 - 1,300 points (P/E 11x and EPS growth of 12-14%) in the negative scenario and towards 1,400 - 1,500 points in the positive scenario (P/E 13x and EPS growth of 14-18%).

Source: https://baodautu.vn/khoi-ngoai-tro-lai-mua-rong-thi-truong-chung-khoan-duoc-ky-vong-khoi-sac-d316345.html