As the year comes to an end, many investors remain dissatisfied despite the Vietnamese stock market's recovery to 1,700 points. Although market liquidity is still lacking, many equities are still declining.

A shift away from internal strengths

Investors are feeling both nervous and optimistic about the prospects for 2026 due to the cautious market attitude in the last few weeks of this year.

Reiterating its optimistic view of the Vietnamese stock market, Ho Chi Minh City Securities JSC (HSC, HOSE: HCM) aims to keep the VN Index at 1,958 points in the base scenario for the upcoming year. This updated goal is based on a bottom-up evaluation approach that considers recent initial public offerings (IPOs), anticipated cash dividends, HSC's wide coverage, and a projection of 7.6% growth for businesses not included in HSC's GDP prediction.

"We think Vietnam is now experiencing a bull market cycle, and this trend is probably going to last until 2026, which might take the index above purely fundamental goals. The primary market drivers, which are mostly propelled by inherent growth momentum, are still in place. According to analysts, this shows a gradual shift in Vietnam's story away from its prior dependence on outside economic factors.

Positive outlook for 2026

Based on a revised bottom-up approach that takes into account new IPOs on the HOSE, anticipated cash dividends, and HSC's extensive market coverage, HSC targets the VN Index at 1,958 points in the base scenario, which represents a 16% increase. It also assumes 7.6% growth for companies outside the portfolio based on GDP forecasts.

Simultaneously, structural improvements and macroeconomic factors are expected to underpin a liquidity-driven bull market in 2026.

Additionally, experts predict that a small number of large caps with exceptional increases would likely dominate market movements. The VN-Index is expected to move around 1 standard deviation in the base scenario and 2 standard deviations in the optimistic scenario, taking into account the typical features of bull cycles in Vietnam, where values tend to broaden above fundamental levels.

VN-Index expected to hit above its baseline target

As the effects of extensive legislative reforms become more noticeable, the VN-Index continues to be extremely sensitive to changes in market mood, particularly in the context of a dynamic 2026. Experienced Vietnamese investors are aware that stock prices often diverge greatly from their fundamental worth due to the market's tendency to be overbought during euphoric times and oversold during downturns. Given this, an overbought situation in 2026 would not be shocking and may cause the index to rise much over the model's baseline objective.

The following is a summary of the main drivers of a bull market in 2026:

First, as exchange rate circumstances stabilize, foreign capital flows will return, and the strategy to improve the market position by March 2026 will advance.

Second, there has been a significant surge in law reforms in a number of areas, especially the capital markets, which include day trading, central counterparty clearing systems, and international financial centers.

Third, strong credit growth and the strongest GDP growth in decades were made possible by stable political conditions, growth-oriented policies, and record levels of public investment.

Fourth, there has been a widespread increase in business earnings.

Fifth, the possibility of a rebound in FDI and exports as the US tariff becomes more apparent.

Sixth, the worldwide trend of loosening monetary policy may promote capital flows into nations like Vietnam that have appealing currency rates in search of better returns.

"If these drivers materialize simultaneously, the Vietnamese stock market could be significantly revalued, and the VN-Index has the potential to far exceed its current target," said HSC.