VietNam Holding Limited (VNH)  said Vietnam's stock market endured a difficult July, with the VNAS Index falling 7.5% despite stronger-than-expected second-quarter earnings and continued economic growth.

The Vietnam All Share Index declined 7.5% during the month, while VNH's net asset value (NAV) fell 9.8%. By the end of July, VNH was down 15% year-to-date, compared with a 6.9% decline for the Vietnam All Share Index.

The manager said the market's weakness was at odds with the underlying fundamentals, with earnings across Vietnam growing 36.6% in the second quarter and full-year growth still expected to be around 20%. Vietnam's GDP expanded 8.2% in Q2, while July exports increased 25% year-on-year and retail sales rose 14.5%.

Imports grew 41.4% in July and 34.8% in the first seven months, resulting in a US$20.5 billion trade deficit. However, VNH highlighted the composition of imports, with computers, electronics and components increasing 82.6% and accounting for almost 40% of imports, reflecting continued investment in manufacturing capacity and export supply chains.

The upcoming FTSE Russell upgrade to Secondary Emerging Market status on 21 September is therefore expected to be significant, potentially widening Vietnam's access to international institutional capital and supporting the continued development of its capital markets.

Within the VNH portfolio, the July correction was broad, although several major holdings delivered strong earnings growth. MWG's second-quarter earnings per share increased 101%, while HPG rose 50%, MBB 40%, VPB 72% and Digiworld 165%.

The market correction has nevertheless left the portfolio trading at relatively low valuations. At the end of July, VNH's holdings were valued at 8.8 times estimated 2026 earnings, compared with 11.2 times for the Vietnam All Share Index and 12.5 times for the VN Index.

VNH said August had already started on a stronger footing, with the portfolio recovering around 5%. The manager expects the combination of strong corporate earnings, relatively low valuations and the approaching FTSE Russell upgrade to provide a more constructive backdrop.

View from Vox

July was a difficult month for VietNam Holding, but the sell-off looks increasingly disconnected from the underlying fundamentals. Strong earnings growth, an 8.2% GDP expansion and the approaching FTSE Russell upgrade point to a market where sentiment has weakened faster than the investment case. With VNH now trading at a significant valuation discount to the broader market, the next test is whether improving earnings can translate into a recovery in share prices.