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Market Insights February 2026

Robust growth across all sectors in January

IN BRIEF

• Vietnam’s economic growth was reinforced in Jan 2026 with strong improvement of manufacturing sector, robust FDI inflows and resilient consumption.
• Despite a trade deficit, the depreciation pressure for the Dong eased in January, thanks to a strong VND demand ahead of Tet and inflows of remittances.
• Following a 41% gain in 2025, the index extended its rally into early January, closing the month at 1,829 points, up 2.5%.

Vietnam’s economic growth was reinforced in Jan 2026 with strong improvement of manufacturing sector, robust FDI inflows and resilient consumption. Despite a trade deficit, the depreciation pressure for the Dong eased in January, thanks to a strong VND demand ahead of Tet and inflows of remittances.

The manufacturing sector expanded 23.6% YoY with broad-based expansion across all provinces, amplified by base effects, as January 2025 coincided with an early Lunar New Year holiday that temporarily reduced production and business activity. Production in major products, including mineral products, automobiles, and basic materials posted robust growth rates of +42% YoY, +37% YoY and +35% YoY, respectively. The PMI posted 52.5 in January and thus pointing to a solid monthly improvement at the start of 2026. External trade accelerated sharply at the beginning of the year, with exports and imports rising 29.7%, and 49.0% YoY, respectively—reflecting front-loaded production and trading activity. By sector, exports from FDI enterprises rose markedly by 42.2% YoY, while the domestic sector declined 1.3% YoY. The trade deficit therefore stood at USD 1.8bn. Foreign direct investment remained resilient. Newly registered FDI reached nearly USD 1.5bn (+14.4% YoY), while disbursed FDI rose to nearly USD 1.7bn (+11.3% YoY), exceeding the pace recorded in 2025.

As of the end of January, public investment disbursement reached 94.8%, equivalent to USD 33.02 billion out of the 2025 planned USD 33.83 billion. Disbursement in January was estimated at 3.4% of the annual plan, amounting to roughly USD 1.3 billion.

Total retail sales of consumer goods and services in January 2026 increased by 9.3% YoY, or 6.3% in real terms. This demonstrates a positive trend in domestic consumption, particularly given that January 2026 did not coincide with the Lunar New Year, whereas the same period last year was the peak month for Tet consumption. This positive momentum was underpinned by steady domestic demand and a surge in tourism, with international arrivals jumping 18.5% to reach 2.5 million.

Inflation remained well below the Government’s target in January and manageable for the Tet month. Headline CPI rose 2.53% YoY in January (vs. 3.48% YoY in Dec-25), largely reflecting a favorable base effect. On a monthly basis, CPI edged up 0.05% MoM (vs. 0.19% in Dec-25), mainly driven by higher live hog prices, the eating-out sub-index (up 0.44% MoM), and housing materials maintenance prices (up 0.6% MoM) ahead of the Tet holiday. In contrast, the transport sub-index fell 2.32% MoM, subtracting 0.23ppts from headline CPI, as gasoline prices declined 5.34% MoM. Core CPI increased 3.19% YoY, exceeding headline inflation, as the transport sub-index, which weighed on headline CPI, is excluded from the core measure.

The VND demonstrated remarkable resilience in January 2026, appreciating 1.3% YTD in the official market and recovering 6% in the unofficial market from its November peak, effectively narrowing the rate gap despite a $1.8 billion trade deficit. This stability was driven by robust year-end remittances, a weaker US dollar (DXY -1.4%), and seasonal demand for VND ahead of the Lunar New Year. While improved liquidity initially allowed the SBV to net withdraw VND 64.3 trillion in January—dropping average overnight rates to 4.3% from 6% in December—pressure resurfaced in early February. In response, the SBV injected additional liquidity via approximately USD 1 billion in FX swaps, a move expected to help stabilize overnight rates as conditions normalize. OMO outstanding balance reached VND 321 tn at the end of January, as compared to 409 tn as of 2025-year-end.

Following a 41% gain in 2025, the index extended its rally into early January, closing the month at 1,829 points, up 2.5%. Vingroup shares have entered a correction phase following a massive 6-to-8-fold rally in 2025, decoupling from the company's strong Q4 earnings report. On a positive note, market breadth has improved as liquidity rotates into other large-cap stocks and sectors. Notably, the State-Owned Enterprise (SOE) theme has gained momentum, fueled by Resolution 79. This resolution is expected to enhance operational efficiency and scale while accelerating state divestment. In January, average daily trading value (ADTV) on the HSX and across all three bourses increased 46.9% MoM and 49.4% MoM, reaching USD 1.33bn and USD 1.47bn, respectively.

Sector performance was broadly positive, led by energy and utilities. Oil & gas delivered the strongest gains, surging 42%, driven mainly by PLX (+67%) and OIL (+51%). This was followed by utilities (+37%), supported primarily by GAS (+62%). In contrast, real estate (-14%), industrials (-6%), and consumer services (-3%) were the laggards.

For 2026, corporate earnings is forecasted to grow 14% YoY (moderating from 17.5% YoY in 2025). Market valuations remain attractive, with TTM P/E of 16.5x and 2026 P/E estimated at 13.8x—trading at a discount to the 5-year average of 14x. Excluding Vingroup, the 2026 forward P/E stands at an even more compelling 11.8x. We believe significant alpha will be generated by laggard sectors offering a combination of high growth and attractive valuations, specifically Consumer, Materials, Energy, and select Banks.