The view came from analysts at VESAF, VinaCapital’s largest open-ended equity fund, after the fund fell 8.3% in July as the VN-Index suffered its steepest monthly decline of the year.

Rising interest rates since the start of the year have reduced the relative appeal of risk assets, while investigations into several companies have weighed on investor sentiment and prompted broader selling pressure. The market began recovering toward the end of July as valuations of many stocks became more attractive.

VESAF said it used the selloff to deploy most of its cash reserves, buying quality companies whose shares had fallen 40-50% from their peaks. “At present, the fund is only interested in opportunities with the potential to double over one to three years."

The fund said equities remained more attractive than bank deposits, which yield about 9% a year, across investment horizons.

Valuations fall to attractive levels

The fund estimates the VN-Index is trading at about 11.5 times projected 2026 earnings. Excluding Vingroup-related stocks, the forward P/E ratio falls to around 9.5 times, a level VinaCapital considers low relative to the earnings growth outlook for listed companies.

The valuation appeal comes as Vietnam’s economy continues to expand and the government steps up policies to support investment and credit.

Vietnam’s planned upgrade by FTSE Russell to emerging-market status in September 2026 could provide another catalyst by improving investor sentiment and attracting additional capital to the stock market.

Economic indicators have also remained supportive. Industrial production rose 11.4% in the first seven months of the year, while manufacturing output increased 12%. The manufacturing PMI rose to 52.9 in July from 51.8 in June, marking a 13th consecutive month of expansion. Output, new orders and export orders all improved, while input-cost pressures eased.

The data suggest manufacturing and exports are maintaining solid momentum despite the broader market volatility.

Earnings growth provides stronger support

The strongest signal for equities came from second-quarter earnings, according to VinaCapital.

Net profit attributable to shareholders of Ho Chi Minh Stock Exchange-listed companies rose 46% year-on-year in the second quarter and about 48% in the first half, according to the fund’s analysis.

Profit growth was broad-based, with 11 of 12 sectors posting positive earnings growth in the first six months. Eight sectors recorded growth of more than 20%, led by materials at 72%, consumer discretionary at 55%, consumer staples at 44%, and insurance at 21%.

The breadth of earnings growth, rather than its concentration in a handful of companies, suggests an improvement in the underlying economy and consumer demand, VinaCapital said.

“Corporate earnings growth remains the key driver of market trends over the medium and long term,” the fund noted.

Vn-Index closed up 0.26% to 1,732 points on Tuesday.