Earnings strength meets market consolidation – October 2025

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Monthly Insights: Earnings strength meets market consolidation

The Vietnam Index reached a new intraday high of 1,794 in October before easing 0.7% by month-end. The mild pullback reflects profit taking after a long rally rather than any deterioration in fundamentals. Average daily trading value was steady at $1.4bn, while retail investors opened more than 310,000 new accounts, the highest monthly figure in a year.

Foreign investors continued to net sell around $825mn, taking total outflows to approximately $5.0bn YTD. The ability of domestic liquidity to absorb these outflows underscores the depth of local participation, but the persistent foreign selling remains a pain point. Global appetite for emerging markets is still cautious, constrained by high returns in developed markets amid geopolitical uncertainty, while pressure on the Vietnamese dong has been compounded by seasonal FDI profit repatriation.

Nonetheless, macro indicators continue to confirm Vietnam’s underlying momentum. Industrial production rose 10.8% YoY in October and PMI climbed to 54.4, signalling renewed strength in both domestic and export demand. Public investment disbursement reached $24.3bn YTD, up 27.8% YoY, as infrastructure projects move from approval to implementation at a steady pace, and disbursed FDI hit $21.3bn, up 8.8% YoY, the highest in five years. CPI remained contained at 3.3%, providing room for the State Bank to maintain accommodative policy conditions.

Corporate earnings added weight to the recovery story. 3Q25 NPAT rose 21.2% YoY on 7.2% revenue growth, while 9M25 NPAT increased 22.4% YoY on 9.0% revenue growth. The improvement was driven by better margins and stronger volumes rather than one-off financial income, showing a genuine recovery in operating performance.

Financials and industrials remained the main growth drivers, while strong signs of recovery in real estate and consumption suggest broader participation ahead. For Dragon Capital’s Top 80 universe, base-case profit growth of 21% in 2025 and 17% in 2026 looks achievable as earnings quality strengthens and performance broadens beyond the large-caps.

Public debt remains moderate at around 33% of GDP, giving the government space to maintain its infrastructure drive without creating fiscal strain. Concurrently, capital market reform is gaining traction. VP Bank Securities completed a $480mn IPO in October, and another large brokerage is preparing its own offering. A new Decree has shortened the IPO-to-listing window from 90 to 30 days, which should improve liquidity and reduce time-to-market for future issuers. With an estimated $50bn IPO pipeline over the next few years, FTSE EM inclusion expected in 2026 followed by MSCI EM by 2030, the shift from policy design to execution is now well under way.

Risks remain centred on the global interest rate path and FX pressure, which will likely determine the pace of foreign re-engagement. Vietnam’s fundamentals remain supportive, but near-term market direction will depend on policy consistency, foreign investor participation, and how well domestic liquidity holds up if external conditions tighten. The next stage of progress will be defined less by sentiment and more by execution.