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Research Insights

Strategy Reports

Viewfinder 2Q2026: Resilience amidst chaos

Viewfinder 2Q2026: Resilience amidst chaos

Our long-term view remains that Vietnam is in the middle of a unique growth cycle and that despite global turmoil is well positioned to outperform all of its peers. This remains a national story of resilience that is unmatched. On the shorter-term horizon, we forecast a 1-year index target of 2055 (12.5% upside) from a bottom up perspective from a more balanced portfolio. Our 2026 GDP growth target remains 7.6% (8% for 2027) despite global uncertainties. We see value across the index which trades at an undemanding 10.4x forward PE when VIC is excluded. Some high-quality names are offering longer term investors excellent entry points (FPT being the most obvious). By sector, we favor banks, consumer, and brokers at these levels.

Viewfinder 2026: Vietnam in self-drive mode

Viewfinder 2026: Vietnam in self-drive mode

Our last strategy book (‘Flexing the bamboo’) was released at a time of extreme uncertainty with US tariffs dominating dialogue. Just six months later and you will struggle to see many tariff references in this report or hear mention of them in the market. Vietnam has pivoted quickly to a domestic agenda with emphasis on the private sector, legislative change, infrastructure building, and administrative and Governmental overhaul. We forecast this will provide 7.6% GDP growth next year. There are a host of upcoming catalysts which give us confidence that the 2025 bull market will continue. We have a base case Index target of 1,958 in 2026 but see the potential for this to overshoot.

Macro & Market Insights

Vietnam economy: Stronger growth, higher forecast

Vietnam economy: Stronger growth, higher forecast

Vietnam's economy delivered another stronger-than-expected quarter, with GDP growth accelerating to 8.39% y/y in 2Q26 and lifting 1H26 growth to 8.18%, prompting us to raise our 2026 GDP growth forecast to 8.5% from 7.6%. External trade remained the key growth driver, with exports and imports already exceeding our full-year forecasts, while resilient domestic demand, record FDI inflows and moderating inflation provide greater policy flexibility for both fiscal and monetary support despite still-tight banking system liquidity. The key downside risk: The potential expiry of the current S.122 tariff arrangement and ongoing US trade investigations could lead to higher US tariffs on Vietnam despite the economy entering 2H26 from a position of considerable strength.

Reform progress toward FTSE EM inclusion

Reform progress toward FTSE EM inclusion

The Interim Country Classification - Mar 2026 will be released after the US market closes on 7 Apr, 2026. This important announcement will determine whether Vietnam is included in the FTSE EM index baskets, as scheduled for Sep 2026. Vietnam is advancing reforms to keep the upgrade on track, marking a key turning point that could attract stronger passive and active foreign inflows while enhancing its investment appeal. At a projected FTSE weighting of 0.22%–0.34%, Vietnam could attract USD313mn–485mn in passive inflows, plus additional active inflows, with many large, liquid blue chips likely to benefit from EM index inclusion.

Sector Insights

Real Estate Development: Proposed terms of housing ownership

Real Estate Development: Proposed terms of housing ownership

The Ministry of Construction has recently submitted the draft for the amended Housing Law, which if passed in the next discussion might become effective in March 2027. A key proposal introduces fixed-term ownership of apartments. The draft's central change is introducing fixed-term apartment ownership (Section 4, Articles 28-29), explicitly stating that ownership terminates when a building's service life ends or when it must be demolished. However, it remains unclear whether the provision would apply to existing projects or only to new ones. In the market, this proposal has created a negative sentiment toward the sector, leading to weak performance. Many good developers are trading near book value, providing an attractive upside. Developers focusing on real demand should be less impacted in our view.

Banks: Mind the funding gap, as liquidity headwinds persist

Banks: Mind the funding gap, as liquidity headwinds persist

Liquidity remains the key constraint. Bank system LDR hit 115% in April as growth in credit again outpaced deposits despite higher deposit rates. With SBV/ State Treasury support nearing practical limits, banks will need to rely more on their own funding capacity. Meanwhile, interest rates are likely to stay elevated in the m-t. We lower credit growth and NIM assumptions, but earnings growth remains solid. Our covered banks are expected to deliver aggregate net profit growth of 14.6%/19.1%/20.5% in FY26-28, respectively, supported by tighter OPEX control and manageable provisioning. We prefer CTG, ACB, and VCB for defensive exposure; TCB, VPB, and HDB for higher-growth, higher-risk exposure; and MBB for a more balanced profile combining resilience and growth; all are rated Buy.

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