Why is the VN30 Index important to Vietnamese investors? Everything you need to know about the main Vietnamese stock market index

Ho Chi Minh Stock Exchange (HOSE) of Vietnam continues to attract investors from around the world. While many regional stock markets are slowing down, the Vietnamese stock market index, especially the VN30 Index, has demonstrated the potential for strong economic growth.

Key Components of the VN30 Index

The VN30 Index comprises 30 leading companies in Vietnam, with the largest market capitalization and highest liquidity in the Ho Chi Minh Stock Exchange. These companies account for approximately 70-80% of the total market value.

The index calculation uses the Free-Float Adjusted Market Cap-Weighted method, an international standard, weighting companies based on the market value that can be traded freely.

Who are the main representatives of the index?

The price movements of VN30 are dominated by 3 major stocks:

• FPT – Technology sector
• HPG – Leading steel producer
• ACB – Asia Commercial Bank

Companies listed in the VN30 index show the diversity of the Vietnamese economy, spread across various sectors.

Sector Composition of the VN30 Index

The Vietnamese stock index VN30 reflects a balanced economic picture:

Categorization based on GICS standards helps investors understand the economic structure clearly.

The 30 Companies Included in VN30 Index

Selection Criteria: The Rigorous Standards Behind VN30

To qualify for the VN30 Index, companies must pass several strict assessments:

Market Capitalization and Size

Companies must be in the top tier by (Market Capitalization) and collectively account for at least 80% of the total market value.

Trading Liquidity

Stocks must have high average daily trading value and be traded continuously for at least 80% of trading days over the past 6 months.

Free-Float

Only stocks that are freely tradable in the market are counted. Shares held by major shareholders or management are excluded. The free-float percentage must be at least 5%.

( Stock Type and Financial Status The VN30 index includes only common shares )Common Shares###, and companies must have stable financial health, not be under watchlist or suspended from trading.

These standards are reviewed twice a year to ensure the index reflects the ever-changing market conditions.

Difference: VN Index vs. VN30 Index

Both indices measure the performance of the Vietnamese stock market but have distinct characteristics.

VN Index covers all stocks listed on HOSE, resulting in higher volatility due to including small and medium-sized companies. However, it provides a comprehensive overview of the entire market.

VN30 Index selects only 30 highly liquid companies, making it more stable and better at reflecting the trends of influential stocks.

Factors Driving the VN30 Index

Movements of the Vietnamese stock market index depend on various internal and external factors.

( Domestic Factors

Vietnamese government’s monetary and fiscal policies, including interest rate adjustments, infrastructure investments, and policies to attract foreign investment, directly influence market confidence.

Corporate earnings within the VN30 are the main drivers of stock prices; better profits lead to higher stock prices.

Inflation rate that is too high reduces purchasing power and may cause investors to withdraw from the stock market.

Exchange rate of the dong plays a crucial role in export competitiveness and attracting foreign investment.

) External Factors

Global economic conditions, including trade wars, political tensions, or other crises, affect international capital flows.

U.S. interest rates rising often lead to capital outflows from emerging markets like Vietnam.

Global commodity prices impact Vietnam’s income, as the country is a major exporter of agricultural and industrial products.

Notable Stocks to Watch in VN30

1. Vinhomes ###VHN### – Real Estate

Current Price: 41,750 VND | P/E: 7.86x | P/B: 0.97x

Vinhomes offers attractive value as Vietnam’s largest real estate developer with projects nationwide. The company is expanding into smart city development, residential projects, amenities, shopping centers, and infrastructure.

( 2. Vietcombank )VCB### – Banking

Current Price: 93,000 VND | P/E: 16.21x | P/B: 2.77x

Vietcombank is the leading financial institution with high liquidity, covering a nationwide branch network. Vietnam’s economic growth boosts credit volume and fee income from financial services.

( 3. Hoa Phat Group )HPG### – Construction Materials (Steel)

Current Price: 24,850 VND | P/E: 14.74x | P/B: 1.47x

A leading steel producer playing a key role in infrastructure and construction development. Growing steel demand from national development projects supports its growth.

( 4. Vinamilk )VNM### – Consumer Goods

Current Price: 71,900 VND | P/E: 17.41x | P/B: 4.44x

Vietnam’s largest dairy producer, with products popular domestically and internationally. Rising demand for quality and health-focused products is expected to support long-term growth.

Why Is It Still Worth Investing?

Vietnam’s economy is growing at one of the highest GDP rates in the region, driving company expansion and profit increases.

Government’s open-door policies and efforts to attract foreign investment ensure continuous capital inflows.

Diversity of the index, comprising stocks from various sectors, helps investors diversify risk effectively.

Long-term growth opportunities for many companies still in early expansion stages.

Conclusion

The Vietnamese stock market index VN30 demonstrates the strong potential of the Ho Chi Minh Stock Exchange. The 30 companies included cover various economic sectors and serve as a good representation of the overall Vietnamese economy.

However, investing in the Vietnamese stock market index requires careful analysis, goal setting, investment horizon, and risk tolerance. If you are interested in a high-growth potential market with a willingness to accept risks, VN30 may be a suitable option to consider.