Vietnam July 2026 Outlook – VN-Index Falls Despite Strong Economic and Earnings Growth

We would like to present you our monthly Macroeconomic & Stock Market Highlights for Vietnam alongside with the monthly performance update of the TIM Vietnam Actively Managed Certificate for July 2026.

Watch our video recap of key takeaways of the Vietnam Marcroeconomic and Stock market in July 2026

Vietnam’s Economy

• PMI rose to 52.9 in July from 51.8, with faster expansion in output, new orders and exports, alongside higher employment and easing inflationary pressure. This strength is echoed in 7M/2026 trade data, where exports and imports grew a robust 21.7% and 34.8% y/y respectively. The trade balance, however, widened to a $20.5 billion deficit, driven largely by higher imports of machinery and electronic components — partly reflecting rising memory chip prices, a cost now beginning to pass through to finished devices (Apple, for one, has recently raised selling prices). As a major assembly hub for global electronics leaders such as Samsung and LG, Vietnam imports these components ahead of re-exporting the finished goods. With
  demand and new orders still firm per the PMI report, we expect the deficit to narrow going forward as those exports follow through.
• FDI disbursement reached USD15.2 billion, up 11.8% y/y, with the manufacturing sector continuing to attract the largest share of investment. Recent announcements further reinforce this trend, with Honda set to begin electric motorcycle production in Vietnam this September, while CP Group plans to expand its investment in food processing and export-oriented manufacturing.
• Retail sales increased by 13.1% y/y in nominal terms and 7.5% after adjusting for inflation. Resilient domestic consumption, together with continued strength in international tourism, remained the key growth drivers. Vietnam welcomed nearly 14 million international visitors during the first seven months of the year, an increase of almost 14% y/y. State investment rose by 18.4% y/y, with stronger disbursement reflected in robust demand for key construction materials. Steel and cement consumption increased by 14.2% y/y and 15.7% y/y, respectively. Land clearance, historically one of the main bottlenecks to public investment, has accelerated following improvements in relocation and compensation policies, supporting faster project execution
• Inflation moderated to 4.6% in July, supported by lower transportation costs following the decline in global oil prices. Nevertheless, transportation costs remained 3.7% higher than a year earlier, continuing to contribute to headline inflation. Housing and construction materials, which account for approximately 18% of the CPI basket, increased by 6.7% y/y, reflecting strong demand for construction materials amid ongoing infrastructure development as well as higher electricity prices during the summer months. Food and foodstuff, representing roughly one-third of the CPI basket, rose 4.6% y/y, driven primarily by higher dining-out prices as restaurants continued to pass rising input costs on to consumers.
• USD/VND stayed flat year-to-date. Despite the trade deficit, the Dong held steady, supported by continued strong FDI disbursement and a higher domestic interest-rate environment. More notable is the unofficial-market quote, which now sits below the official rate — a reversal from the roughly 1-2% premium seen in recent years. This likely reflects the government’s aggressive crackdown on gold speculation and tighter inspection of the crypto market, both of which have curbed unofficial demand for USD. We therefore expect continued improvement in the balance of payments in the coming quarters.
• Vietnam faces pressure from the U.S. on trade and intellectual property, but the situation has been well-managed so far. On 24 July, the U.S. imposed an additional 12.5% tariff on Vietnamese exports, but we do not see it eroding the country’s relative competitiveness, given the tariff applies to nearly all major U.S. trading partners. Pressure has also extended to transshipment: U.S. customs officials have carried out spot inspections of China-linked factories in Vietnam, examining local value-added and possible intellectual property violations, but have found no significant evidence of Chinese goods illicitly transiting the country. Locally, the government is raising corporate compliance standards through stricter, nationwide enforcement of intellectual property protection.

Vietnam’s Stock Market

Markets occasionally confuse price with value. July was one of those months.

• The VN-Index declined 6.3% during the month, with selling pressure spreading across nearly every sector. Yet the correction reflected market positioning rather than deteriorating corporate fundamentals. A persistently high interest-rate environment triggered margin deleveraging, and as prices fell, forced selling further accelerated the decline. Foreign investors added to the weakness, recording net outflows of more than US$455 million during the month.
• The persistence of foreign selling appears increasingly disconnected from developments within Vietnam itself. One possible explanation is that global investors continue to favor markets offering direct exposure to the AI investment cycle, with capital concentrated in US technology and semiconductor heavy markets such as Taiwan and Korea. Whatever the reason, the key point is that the selling has not been driven by weaker corporate earnings or a deterioration in Vietnam’s economic outlook.
• Indeed, the correction has not been accompanied by weaker business performance. The Q2 earnings season has been one of the strongest in recent years, with aggregate net profit of the 818 listed companies that have reported results (excluding Vingroup-related firms) increasing 35.1% yearon-year. The results confirm that economic activity remains healthy across Vietnam’s major industries.
• The breadth of the earnings recovery is particularly encouraging:
  • Hoa Phat Group (HPG), Vietnam’s largest steel producer, reported a 51% increase in net profit, supported by a 30% rise in sales volumes and higher selling prices—highlighting continued strength in construction demand.
  • Techcombank (TCB), the country’s second-largest private bank by assets, recorded 17.7% profit growth, driven by strong credit expansion and fee income, suggesting financial activity remains robust.
  • Masan Consumer (MCH), Vietnam’s leading listed consumer company, increased profit by 11% on a 10% rise in sales volumes, reflecting resilient domestic consumption.
• Not every industry has shared equally in the recovery. Higher inflation and geopolitical uncertainty have affected producers of discretionary consumer products, particularly beer, while exporters in fisheries and textiles continue to face softer external demand. These sectors, however, represent only a relatively small share of the overall market.
• The result has been a classic valuation de-rating. Earnings expectations have continued to improve, yet share prices have declined, resulting in a sharp compression in valuation multiples. The VN-Index (excluding Vingroup-related firms) now trade at just 9.5x 2026F earnings, down from 11.0x only one month ago. These are valuation levels typically associated with periods of severe market stress, yet this time they have been reached with the underlying earnings outlook largely unchanged.
• We continue to exclude Vingroup-related companies from our calculations because recent earnings have been heavily influenced by nonrecurring items and accounting effects. Vingroup’s (VIC) reported profit was largely driven by the deconsolidation of its manufacturing subsidiary, while Vinhomes (VHM) benefited from sizeable bulk property sales that offer limited visibility for future earnings. Excluding the group provides, in our view, a more representative picture of underlying corporate profitability in Vietnam.
• Looking ahead, Vietnam’s inclusion in the FTSE Secondary Emerging Market Index will become effective on 21 September 2026. The initial passive inflow is estimated at only US$100–150 million—modest in isolation, but supportive of market liquidity and sentiment. The larger opportunity lies in active capital. Historically, market reclassifications have attracted substantially greater discretionary allocations, with current market estimates pointing to approximately US$3 billion over time. For a market of Vietnam’s size, such inflows would be highly meaningful.
• More importantly, Vietnam offers something increasingly scarce in today’s global equity markets: diversification. While much of the world’s equity performance has become concentrated around artificial intelligence and semiconductor supply chains, Vietnam’s earnings growth is being driven by a very different set of structural forces—industrialization, infrastructure investment, manufacturing expansion, rising household incomes, domestic consumption and increasing financial penetration. Rather than relying on a single technological theme, Vietnamese companies are benefiting from the steady development of a country that continues to build, urbanize and grow. These characteristics provide investors with exposure to earnings drivers that are largely independent of the global technology cycle.
• Markets can remain disconnected from fundamentals for longer than investors expect, and we make no attempt to predict where prices will bottom. Eventually, however, earnings matter. At today’s valuations, a growing number of company insiders have registered to purchase shares in their own businesses. These are the people with the deepest understanding of their companies’ prospects and intrinsic value. Their willingness to increase ownership reinforces our view that the current disconnect between price and value has created an increasingly attractive opportunity for long-term investors.

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Please download the July 2026 Factsheet for our TIM Vietnam Actively Managed Certificate.

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