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Vietnam Q2 2026 Outlook: Re-rating Potential Amid Global Uncertainty
Vietnam’s equity market has reached an important milestone with its upgrade to Secondary Emerging Market status by FTSE Russell, marking a step forward in market accessibility and positioning the country for an estimated USD3 billion in inflows starting from September 2026. At the same time, the economy has continued to deliver solid performance, with Q1/2026 GDP growth reaching 7.8%.
That said, the overall narrative has been overshadowed by escalating Middle East tension, which have dominated global headlines and weighed on investor sentiment. While Vietnam is not immune given its position as a net energy importer, the direct impact so far has remained contained.
In this note, we sketch out three potential scenarios for the trajectory of the conflict. Our base case assumes a reopening of the Strait of Hormuz by end-April, as mounting domestic pressure in the U.S. incentivizes a near-term de-escalation. Additionally, as Trump is set to meet Xi Jinping in mid of May, there is growing pressure for him to have some progress with Iran beforehand, strengthening his position ahead of the meeting. Under this scenario, we expect Vietnam’s economy to remain on a stable path, with 2026 GDP growth at around 7.0% and inflation staying manageable at approximately 4.5%.
Looking ahead, Vietnam enters a new leadership term with a highly committed and execution-focused government, which we expect to accelerate public investment and maintain policy support for growth. Combined with resilient FDI inflows and continued expansion by global manufacturers, this provides a supportive foundation for medium-term economic momentum despite near-term volatility.
From a market perspective, the recent correction—down 6.2% year-to-date—has largely priced in geopolitical risks, in our view. Valuations have become increasingly compelling at 11.8x 2026F P/E, while Vietnam, now upgraded to Emerging Market status, continues to trade at 20% discount to regional peers. This, together with expected foreign inflows and ongoing improvements in market infrastructure, suggests potential for re-rating over time. Over the medium term, we expect current developments to support potential inclusion in the MSCI Emerging Markets Index watchlist by June 2027.
To make it easy to follow, we’ve prepared a brief recap of the key takeaways in an Avatar video below:
