Fri, Feb 13, 2026, 10:50:04
As of the close on Friday, the VN-Index stood at 1,755.49 points, corresponding to a price-to-earnings (P/E) ratio of 14.69 times - the lowest level in almost two months. The contraction in the P/E ratio has outpaced the decline in the benchmark index itself.
Truong Hien Phuong, senior director at KIS Securities Vietnam, said the sharp drop in the VN-Index’s P/E ratio reflects two main factors: rising corporate earnings and falling share prices.
According to data from FiinGroup, aggregate after-tax profits of listed companies rose 31.3% year-on-year in Q4/2025. For the full year, earnings growth reached 29.7%, while equity prices have corrected sharply.
“When earnings increase while prices decline, the P/E ratio naturally falls,” Phuong said. “This is a positive signal, indicating that valuations are gradually returning to more reasonable levels and opening up medium- to long-term investment opportunities.”
Phuong added that the market has entered oversold territory, despite the absence of any major negative developments that would justify the recent correction. Most stocks have fallen significantly from previous price levels, reflecting investor sentiment rather than a deterioration in corporate fundamentals.
He attributed the market’s recent lacklustre performance to an “information vacuum” and seasonal factors ahead of the Lunar New Year holiday.
“Ahead of Tet, liquidity typically declines as investors withdraw cash for personal needs and reduce margin positions due to the long holiday,” Phuong said. “In a low-liquidity environment, even a small number of sell orders can push the market lower, easily triggering a chain reaction of negative sentiment unrelated to fundamentals.”
Bui Van Huy, head of investment research at FIDT, also described current valuations as reasonable, stressing that P/E levels should be assessed in relation to interest rates.
“At a P/E of around 14.29 times, the earnings yield (E/P) is roughly 7%,” Huy said. “With average deposit rates also around 7%, the current P/E level is reasonable.”
“If interest rates rise further, the market’s fair P/E would be lower,” he added. “From a long-term perspective, a P/E range of 13-14 times looks attractive given growth expectations for 2026-2030.”
Analysts at Viet Dragon Securities (VDSC) forecast a target P/E range for the VN-Index of 12.5x to 14.5x over the next three to four months, reflecting expectations that rising 10-year government bond yields have largely been priced in.
Within this range, VDSC assumes that the Vingroup group of stocks will be re-rated towards a more reasonable historical average, in line with the net profits generated for shareholders. Under the current valuation structure, the market’s P/E could remain about 1.0-1.3 points above its long-term average.
Factors that could support valuations trading near the upper end of the range include a potential 25-basis-point interest rate cut by the Fed before the end of Q1/2026, resilient earnings growth in Q1/2026, and announcements by FTSE Russell related to Vietnam’s market upgrade review.
By contrast, potential near-term headwinds include policy coordination risks between the Bank of Japan and the Fed affecting global liquidity, suboptimal domestic liquidity management between the State Bank of Vietnam and the Treasury that could keep overnight rates elevated, and policy uncertainty under U.S. President Donald Trump, alongside broader global geopolitical risks.
