VN-Index valuation at 13.8x trailing P/E and 12.2x forward P/E considered reasonable given long-term growth prospects, SHS says

SHS Securities said the VN-Index’s trailing P/E stands at 13.8x, with a forward P/E of 12.2x. The valuation is considered relatively reasonable given Vietnam’s long-term growth prospects and the size of the country’s 2026 GDP.

Market activity in early April 2026 began under pressure as geopolitical tensions in the Middle East escalated. The United States and Israel continued strikes on Iran, raising uncertainty and disrupting energy supply chains, prompting investors and fund managers to sell stocks and move into safer assets.

Investor sentiment also turned cautious amid fears that global stock markets could enter a downturn after a four-year cycle, similar to the Russia–Ukraine conflict in 2022 and the 2018 slowdown.

Key factors shaping April 2026

In SHS’s view, the VN-Index in April 2026 will continue to be influenced by expanding geopolitical tensions, with a new focus on the Middle East, alongside slower credit growth and rising deposit and lending costs.

Additional risks cited include narrower trade flows, supply-chain disruptions, high margin debt, higher margin requirements, energy crisis concerns, and inflation rising and weighing on growth.

Despite these headwinds, SHS highlighted positive domestic conditions, saying Vietnam’s economy has strong resilience and room to maneuver fiscal policy to support growth. It also noted that market capitalization after a round of declines is relatively reasonable versus long-term growth potential.

Market performance and near-term catalysts

In March 2026, the VN-Index ended an uptrend around a trough near 1,080 points, after a peak around 1,920 in April 2025. SHS pointed to two notable shocks: the early-April 2025 tariff shock and the oil-supply shock in March 2026.

SHS expects April 2026 to start with quarterly earnings results for Q1, the mid-year upgrade by FTSE, and inflation pressures and higher costs affecting companies and the economy in Q2.

Valuation, earnings yield, and market outlook

SHS said that at the end of March 2026, total market capitalization was about USD 386 billion, roughly 75% of 2025 GDP. The VN-Index P/E was 13.8x and forward P/E was 12.2x. The valuation is viewed as relatively reasonable, though mid-term growth over the next one to two quarters remains uncertain.

SHS also estimated the earnings yield at about 7.3%, which it said is not especially attractive compared with current saving rates. As a result, it expects the market to need time to accumulate as company fundamentals improve.

On relative valuation, SHS said the forward P/E of 12.2x is in line with regional markets.

For trading range expectations, SHS forecast the VN-Index will move within a narrow band, with support around 1,600 points and resistance around 1,750 points. It said opportunities for strong growth are difficult to find given the risk factors and uncertainties dominating financial markets.

Accordingly, SHS maintained a neutral stance, while cautiously considering value opportunities, including high-dividend-yield positions among quality companies.

Interest rates, deposit competition, and credit transmission

On rates, SHS noted that the late-March surge in deposit rates suggests capital pressure in the banking system is returning to a broader trend rather than remaining a local phenomenon. It cited the reappearance of a 10% per year deposit rate after about four years and rising 12-month deposit rates among the Big Four from 5.2% to 5.9%, reflecting more intense competition for deposits amid currency volatility and unstable interbank liquidity.

SHS said the biggest risk from this trend is the cost of capital for the corporate sector. With the economy highly sensitive to interest rates, a further 1% increase could lift system-wide borrowing costs by about VND 184 trillion per year. This would likely narrow margins, reduce private investment demand, and weaken the resilience of highly leveraged firms.

SHS added that this is a creeping cost that typically becomes more evident in subsequent quarters after deposit rates rise.

However, SHS argued that the core issue is that the rate increases mainly reflect a race for deposits among banks rather than a surge in credit demand. It said credit data through 24/03 remains modest, indicating capital is not flowing strongly into the real economy but circulating within the financial system.

Thus, SHS described a paradox: the cost of funds rises before growth can benefit. To achieve double-digit growth, it said relying too heavily on public investment is insufficient, and sustainable growth must come from a simultaneous rebound in consumption, exports, and private investment.