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OCTOBER 2025 MONTHLY MARKET MONITOR: THE LONG-AWAITED

As October begins, market attention is centered on whether Vietnam will officially meet FTSE’s criteria for an upgrade to “Secondary Emerging Market” status after years of anticipation. However, we believe the upcoming third-quarter 2025 earnings season will remain the primary driver shaping market valuation trends. Meanwhile, the potential FTSE upgrade and a possible Fed rate cut in the October FOMC meeting could act as short-term catalysts for market volatility.
Survey results from our analyst coverage suggest that earnings momentum remains robust: third-quarter 2025 profits are expected to rise 22% year-on-year, outperforming our top-down projection of 15%. Market expectations for 2025 have also turned more optimistic since late July.
As for the upgrade, this is more likely to serve as a sentiment catalyst than to alter the market’s fundamental fair value.
Regarding the Fed, markets are pricing a high probability of a 25-bp cut (98%), but delayed data releases stemming from the U.S. government shutdown could prompt a more cautious stance now and a larger 50-bp cut in December.
Investors should also monitor several uncertainties that could pose risks: (1) the duration of the U.S. government shutdown, (2) the Supreme Court’s ruling on former President Trump’s countervailing tariff measures, and (3) geopolitical flashpoints that may affect trade and supply chains.
We maintain our VN-Index range of 1,489–1,758, reflecting both short-term risks and 2025 EPS growth expectations. After a strong rally, the index paused in August as valuations approached the 10-year average P/E. Third-quarter earnings should provide a near-term boost, but sustained upside beyond the long-term valuation average remains constrained by external headwinds.
In the near term, we maintain a “Hold” stance with prudent buying power, recommending portfolio diversification and a focus on fundamentally strong stocks. With the market likely to consolidate in a mildly upward trend, capital flows are expected to rotate toward sectors with attractive valuations and clear earnings visibility.
For this review, we add DCM and PVD and temporarily replace in FMC. We also rebalance weights to prioritize names trading below our assessed fair value and carrying near-term catalysts.