In a letter to investors on 29/7, investment fund Dragon Capital stated that the stock market is causing concern for investors as widespread selling pressure occurs.
The Ho Chi Minh City Stock Exchange's benchmark index breached several key psychological thresholds, at one point losing nearly 15% from its historical peak. The index has only recently recovered over the last two trading sessions, regaining the 1,700 point mark, but the risk of further correction remains.
"The current correction reflects the confluence of multiple factors, most of which are short-term in nature", Dragon Capital wrote.
After a sharp correction, the market's P/E ratio is currently at 11,9 times, significantly lower than some regional markets such as Thailand (16,1), Malaysia (15,2), and Singapore (17,3). The trailing P/E (calculated over the last 12 months) at times reached around 10 times, near a 10-year low.
Numerous leading stocks have fallen to multi-year lows, presenting opportunities for investors. For example, in the banking sector, VCB, CTG, EIB, and TPB, among others, hit one-year lows; while in securities, SSI, VIX, and VCI were noted. In real estate, KDH temporarily returned to late 2022 price levels, and NLG to early 2023 levels. PNJ shares dropped to their lowest since 10/2020, nearly 6 years ago, due to legal and corporate governance risks, before showing strong recovery signals.
Additionally, some stocks are trading at valuations equivalent to the period after the US announced its reciprocal tariff policy in 4/2025, representing a low point of approximately one and a half years. According to Dragon Capital, current price levels offer an opportunity to accumulate shares of companies with strong fundamentals, stable profit growth, and high asset quality for a 2-3 year investment horizon.
"From the perspective of valuation and corporate earnings, the margin of safety for many investments has improved despite the persistence of short-term risks", Dragon Capital's analysis team noted.
While the VN-Index underwent a sharp correction, Dragon Capital has not observed a corresponding decline in corporate earnings. Many listed companies continue to report positive business results, and the overall market's profit outlook for this year remains positive. Economic indicators such as credit growth, domestic consumption, and investment are showing favorable developments.
This investment fund believes a notable signal is that insiders and executives of many companies have registered to buy shares in their own firms. These transactions span various sectors: securities, retail, food, exports, residential real estate, and industrial parks.
"This signal reflects a positive assessment by insiders regarding the companies' medium and long-term prospects", the fund wrote. They also noted that these transactions should be considered alongside asset quality, profit outlook, cash flow, and corporate valuation, rather than as a standalone indicator.
 |
VN-Index chart showing two sharp corrections (pink frames) in 4/2025 and 7/2026. Screenshot. |
VN-Index chart showing two sharp corrections (pink frames) in 4/2025 and 7/2026. Screenshot.
Forecasting upcoming trends, the fund's experts stated they "cannot confirm the market will fully recover within a few months". Short-term volatility may persist as the market assesses factors such as liquidity, geopolitics, trade policy, and individual corporate business prospects.
However, based on historical data, Dragon Capital expects strong recoveries to occur as uncertainty decreases and confidence is gradually restored. The group cited that after periods of significant volatility, such as Covid-19, corporate bond crises, exchange rate pressure, and tariff policies, the VN-Index increased by 23-76% in the subsequent 12 months. Their member funds also accumulated 28-85% during the same period.
"During this period, we continue to focus on intrinsic value and long-term corporate prospects, rather than short-term market fluctuations", the investment fund wrote.
Dragon Capital was established in 1994, 6 years before the Vietnamese stock market was launched. They manage over USD 6 billion in total assets with numerous equity, bond, balanced, and ETF funds.
Phuong Dong
