Vietcap and VDSC agree that GDP growth and moderating inflation are not enough to sustain the rise of the VN Index. The market is awaiting an earnings season that justifies current valuations.
The VN Index is approaching the 1,606-1,979 point range, according to projections from Vietcap Securities, but analysts warn that the upward trajectory will depend on corporate earnings, not just macroeconomic expectations. The moderation of inflation in June, which stood at 4.7% year-on-year compared to 5.6% in May, has created a more favourable environment, although geopolitical risks persist that could reignite pressures on energy prices.
Ms. Hoang Thuy Luong, senior manager of the Macroeconomics Department at Vietcap, points out that the decline in inflation was partly due to the preliminary ceasefire agreement between the United States and Iran, which drove oil prices down. However, in early July, a U.S. airstrike against Iran caused a recovery in crude prices, indicating that inflationary pressure could rise again if geopolitical tensions escalate.
On the other hand, the State Bank of Vietnam continues to withdraw net liquidity from the banking system to ease pressure on the exchange rate, amid a strong dollar and no clear signs of rate cuts from the Federal Reserve. According to NH Securities Vietnam (NHSV), this withdrawal process could conclude soon, potentially paving the way for interest rate cuts starting in the fourth quarter of 2026. A lower interest rate environment typically boosts stock valuations, as investors accept higher P/E ratios.
The Vietnamese economy maintains a solid pace: GDP growth for the first half of 2026 was 8.18% year-on-year, the highest rate since 2000, according to VDSC. Vietcap projects annual growth of 8.5%, surpassing the 8% of 2025. Industrial production, exports, and foreign direct investment (FDI) remain the main drivers. Registered FDI reached $34.7 billion in the first half, up 61% from the previous year, reflecting international investors' confidence in the medium and long term.
However, Ms. Nguyen Thi Phuong Lam, director of the VDSC Analysis Centre, warns that the growth of earnings among listed companies is concentrated in sectors oriented towards domestic demand, such as banking, real estate, and non-financial firms. This means that the reflection of GDP growth in corporate earnings will depend more on domestic consumption than on exports. “A favourable macroeconomic environment is only a necessary condition,” Lam states. “For the VN Index to reach higher levels, the sufficient condition remains the ability of companies to achieve earnings growth in line with market expectations.”
Credit is also showing signs of moderation: Vietcap forecasts growth of 15.3% in 2026, down from 19% the previous year. This slowdown points to a transition towards a more efficient growth model, based on capital productivity rather than credit expansion. The corporate income tax exemption policy for newly established small and medium-sized enterprises could reinforce the dynamism of the private sector.
For investors, the key will be the upcoming earnings season. If companies can show solid profits, the VN Index could continue its climb towards 1,979 points. Otherwise, current valuations, already high after the strong rebound in the first half, could correct. Analysts recommend paying attention to domestic sectors and the evolution of geopolitical tensions affecting energy prices.
You may also like
