Stock market cap rises over $57.5 billion from tariff lows

Stock market cap rises over $57.5 billion from tariff lows

This vibrant recovery is attributed to several key factors, including positive market sentiment, attractive valuations and the return of foreign investment.

Traders work in a transaction office of a securities company. — VNA/VNS Photo

The stock market has witnessed a substantial recovery, with market capitalisation increasing by nearly VNĐ1.5 quadrillion (US$57.5 billion) in less than two months since hitting a low due to tariff concerns.

The VN-Index recently surged nearly 11 points, reaching approximately 1,350, marking its highest level in more than three years.

Since the tariff-induced low recorded on April 9, the index has rebounded more than 250 points, translating to an impressive 23 per cent increase. The market capitalisation of the Hồ Chí Minh Stock Exchange (HoSE) alone has risen over VNĐ1.2 quadrillion, bringing the total value close to VNĐ5.8 quadrillion.

This resurgence includes contributions from new listings, such as Vinpearl (VPL), which debuted in mid-May with a valuation exceeding $5 billion.

This vibrant recovery is attributed to several key factors, including positive market sentiment, attractive valuations and the return of foreign investment.

In May, foreign investors shifted from a selling to a buying stance, accumulating nearly VNĐ900 billion VND in net purchases, a trend that continued into early June with around VNĐ700 billion in additional net buying on HoSE.

The easing of tariff tensions, coupled with optimistic news regarding negotiations, has alleviated investor anxiety. 

This has led to a flood of capital into the market, as many stocks have become appealingly priced following the earlier sell-off.

Analysts predict that the ongoing recovery may be bolstered further if Việt Nam's stock market receives an upgrade in its status, particularly following the launch of the KRX clearing system in May.

According to assessments from various analysts, the country stands a strong chance of being upgraded by FTSE as soon as September. In contrast, the upgrading process with MSCI may take longer due to foreign ownership limitations.

Historically, foreign capital tends to flow in approximately 6-12 months prior to an official upgrade, positioning this period as a strategically advantageous time for investors.

Despite the recent market gains, analysts caution that the VN-Index, now trading at approximately 12.9 times earnings, remains undervalued compared to its ten-year average, which suggests a discount of around 16 per cent. 

Furthermore, earnings per share (EPS) growth for listed companies on HoSE is projected to reach between 12 per cent and 17 per cent for 2025, depending on various tariff scenarios. 

Bizhub