HÀ NỘI — The capital markets are expected to provide around VNĐ10 quadrillion (US$386.5 billion) towards meeting the country’s investment needs during 2026–2030, as the Government targets annual economic growth of at least 10 per cent and businesses seek more funding to expand production and operations.

Total investment demand for the five-year period is estimated at VNĐ38.5 quadrillion, with the State budget expected to provide around VNĐ8.5 quadrillion, or approximately 20 per cent. The remainder will need to be financed by the private sector and international capital sources.

Nguyễn Hoàng Dương, vice chairman of the State Securities Commission (SSC), said the capital and stock markets were expected to mobilise an average of VNĐ2 quadrillion annually during the period. Total capital raised through the stock market is projected to reach approximately VNĐ5.4 quadrillion over the five-year period, more than double the amount raised during 2020–2025.

The stock market will therefore be one of several channels helping to meet the economy’s expanding financing needs, alongside bank credit, State budget funding and international capital.

Cấn Văn Lực, a member of the National Financial and Monetary Policy Advisory Council and chief economist at BIDV, said bank credit currently accounted for approximately 48 per cent of total capital mobilised through the channels analysed, while the stock market accounted for around 6 per cent and corporate bonds about 9.4 per cent.

The scale of investment required to sustain high growth over several years is increasing the importance of diversifying funding sources and improving the ability of capital markets to channel resources to businesses.

Vũ Thị Chân Phương, chairwoman of the SSC, said the combined market capitalisation of the two stock exchanges had reached approximately $404 billion by the end of September, equivalent to 81.7 per cent of gross domestic product (GDP).

Average daily share trading value had reached around $1 billion since the beginning of the year, while the number of securities accounts stood at approximately 13.9 million.

However, market capitalisation and trading liquidity do not fully reflect the capacity to raise new capital for businesses. Meeting the economy’s investment needs will also require the market to improve its capital raising capacity and direct resources towards companies seeking to invest and expand production and business activities.

The Ministry of Finance is working to refine the Securities Law, introduce pilot mechanisms, simplify business requirements and administrative procedures, expand the supply of capital and diversify investment products, while making it easier for businesses to list.

The policy direction also includes encouraging large companies, firms with sound corporate governance and foreign-invested enterprises to list, alongside developing green bonds and derivatives, increasing participation by institutional and foreign investors, completing the central counterparty clearing mechanism and modernising market surveillance systems.

A production line for camera modules and electronic components destined for export in Phúc Sơn Industrial Park, Ninh Bình Province.

Economic growth, stock valuations

While high economic growth could create opportunities for businesses to expand production, revenue and profits, GDP growth and share prices do not necessarily move in the same direction.

Nguyễn Thị Bình Minh, director of the Business Centre at Mirae Asset Vietnam Securities, said economic growth and stock prices were influenced by different factors.

The market had moved beyond an era of cheap money, while elevated US Treasury yields were putting pressure on the US dollar, capital flows, exchange rates and the room for domestic interest-rate management.

The US 10-year Treasury yield had reached 5.34 per cent, its highest level in 24 years, after rising 80 basis points in the third quarter. Although weaker employment data reduced the likelihood of a US Federal Reserve rate increase in October, the yield remained around 5.28 per cent.

These factors affect funding costs, cash flows and asset valuations, influencing how the stock market reflects the economy’s growth outlook.

The VN-Index’s price-to-earnings (P/E) ratio currently stands at approximately 12.1 times, around 12 per cent below its three-year average of 13.8 times.

Minh said a low P/E ratio did not automatically make a stock attractive. A company trading at eight times earnings could be considered inexpensive if its profit was expected to increase 25 per cent the following year. The same valuation could become a value trap if earnings were projected to decline 30 per cent. — BIZHUB/VNS