Upgrade prospects put spotlight on next destination of investment flows

Upgrade prospects put spotlight on next destination of investment flows

The upgrade would not only enhance the market's reputation but also create opportunities to attract new investment flows, providing additional impetus for a new phase of growth, said experts.

A bull statue in front of the Hochiminh Stock Exchange (HoSE) in HCM City. — VNA/VNS Photo

The stock market is approaching a potentially important milestone as prospects for an upgrade by FTSE Russell become increasingly clear, creating expectations for new capital inflows and providing additional momentum for the market to enter a new growth cycle.

Nguyễn Thị Thu Huyền, a member of the Board of Directors and CEO of Viet Dragon Securities Corporation (VDSC), said the possibility of the market upgrade by FTSE Russell had become increasingly tangible.

According to Huyền, the upgrade would not only enhance the market's reputation but also create opportunities to attract new investment flows, providing additional impetus for a new phase of growth.

She noted, however, that opportunities are accompanied by challenges, with investors continuing to face uncertainties related to inflation, exchange rates, interest rates, corporate input costs and geopolitical instability around the world. 

Under such conditions, flexibility, discipline and clear investment strategies remain key to achieving success.

Nevertheless, investors' main concern is the changes during a new growth cycle.

Nguyễn Thị Phương Lam, director of Analysis at VDSC, said the economy was gradually entering a new growth cycle with characteristics different from previous periods.

While the 2011-2019 period recorded relatively stable annual growth of around 6-7 per cent and the years from 2020 to 2023 were disrupted by the pandemic, the economy had returned to a clearer recovery trajectory since 2024.

She said growth targets for the 2026-2030 period would go beyond maintaining the recovery momentum, with ambitions for higher expansion and even double-digit growth over the longer term.

To achieve these goals, policies are focusing on addressing key bottlenecks through institutional reforms, accelerated public investment, infrastructure development, logistics and industrial parks, as well as upgrading the economy's position in high-value technology supply chains.

Despite lingering business challenges, VDSC believes corporate earnings will remain the fundamental pillar supporting the stock market in the coming period.

According to estimates from the firm's research department, market-wide earnings per share (EPS) in 2026 could rise by between 17 per cent and 23 per cent from the previous year.

Banks are expected to continue playing a leading role thanks to sustained double-digit credit growth. For the property sector, particularly companies within the Vingroup ecosystem, prospects were viewed positively due to a low comparison base, progress in major projects and favourable sales performance.

In terms of valuation, the market has become more attractive following a period of sharp correction. 

Based on Bloomberg data compiled by VDSC, the price-to-earnings ratio of the VN-Index, excluding the impact of Vin-related stocks, had fallen by about 20 per cent since the beginning of the year, declining from 14.6 times to 11.4 times by the end of May 2026.

Under a scenario in which corporate earnings continue to expand and valuations gradually improve, VDSC said the VN-Index could head toward the 2,100-point level during its forecast period.

From the perspective of VDSC's analysts, the current stage is more suitable for accumulation and long-term investment rather than chasing short-term rallies.

The securities firm highlighted five areas of opportunity, including companies capable of passing higher input costs on to consumers, businesses with healthy balance sheets and strong cash flows, sectors benefiting from public investment and infrastructure development, banks with good asset quality and sustainable credit growth, and securities firms with diversified service ecosystems that stand to gain from market reforms and the upgrade story.

Meanwhile, investors were advised to remain cautious toward companies with high financial leverage, heavy dependence on imported raw materials or share prices driven mainly by short-term speculation.

According to Hồ Quốc Tuấn, senior lecturer at the University of Bristol in the United Kingdom, the upgrade is important but is not the sole factor determining the country's ability to attract foreign capital.

He noted that with global funds currently concentrating on the US, artificial intelligence and highly liquid assets, attractive valuations alone would be insufficient to draw international investors. Việt Nam, he said, would need a compelling growth narrative.

Such a narrative could be built around large-scale public investment, infrastructure breakthroughs, deeper participation in global technology value chains or significant improvements in corporate governance and market transparency.

"An upgrade is the starting point, not the destination," Tuấn said.

Insiders say that the focus should not be on predicting a super rally in stock prices, but rather on identifying quality businesses capable of benefiting from a new growth cycle.

They agree that opportunities are emerging as valuations have become more attractive, corporate earnings continue to grow and prospects for a market upgrade are becoming clearer. However, investment outcomes will depend on the ability to select businesses carefully, manage risks and maintain long-term discipline. 

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