What is the VN Index? Learn about the Vietnamese stock index from A to Z

VN Index is the main indicator reflecting the health of the entire Vietnamese stock market. It is calculated from the total market capitalization of listed companies on the HOSE (Ho Chi Minh Stock Exchange) – the largest and oldest trading floor in our country since 2000. Through the VN Index, investors can grasp an overview of market fluctuations, investor sentiment, and the strength of the national economy during each period.

What exactly is the VN Index?

VN Index represents the aggregate measure of the Vietnamese stock market. Unlike individual indices, VN Index includes all stocks traded on the HOSE, not just the large-cap stocks. Its value is compared to the base date of July 28, 2000 – the day the Vietnamese stock market officially started operating.

To make it clearer: when VN Index stands at 1,203 points (as of April 2024), it means the market value has increased 12 times from the initial point. This is how investors measure the relative performance of the entire Vietnamese stock market over time.

Besides VN Index, the market also has other indices such as VN30 (35 largest capitalization companies), HNX Index, or Upcom Index. However, VN Index remains the most important indicator, similar to the role of Dow Jones in the US market.

Calculation formula and meaning behind the number

VN Index is calculated using the Passcher price index method, with the standard formula:

Index = (Current market capitalization / Original market capitalization) × 100

Where:

• Current market capitalization = All stock prices × Number of outstanding shares today
• Original market capitalization = Stock price × Number of shares on July 28, 2000

Although it seems just a number, VN Index reveals a lot about the economy and market psychology:

Investor sentiment: When VN Index rises, it reflects confidence and positive capital flow from investors. Conversely, a sharp decline indicates worry and panic selling.

Economic health: This index indirectly reflects the quality of the national economy through factors such as fiscal policy, interest rates, inflation, and corporate performance.

Market performance: Comparing VN Index over the years helps investors evaluate the actual growth rate of the Vietnamese stock market.

The journey of the VN Index through different periods

2006 - 2007: The golden era

After Vietnam joined WTO (2006), the Vietnamese stock market experienced a boom. 2007 was considered the peak with numerous IPOs of state-owned enterprises, and VN Index increased fourfold compared to 2006. However, the rapid growth also led to an overheated market, then a cooling down.

2008 - 2009: Global crisis

The 2008 global recession heavily impacted the market. But from early 2009, the government implemented economic stimulus measures, and VN Index began to recover gradually.

2020 - 2021: Covid-19 and resurgence

In early 2020, the pandemic caused VN Index to drop 31%, with foreign investors selling off. But thanks to effective pandemic control, interest rate cuts, the market turned green again from Q2/2020. By the end of 2021, VN Index hit a historic high of 1,536 points, with trading volume exceeding 40 trillion VND.

2022 - 2023: Decline and recovery

From March 2022, with the Fed’s prolonged rate hike cycle until July 2023, VN Index entered a continuous downward trend. However, when the Fed paused rate increases, the market started to recover. In 2023, VN Index achieved a return of 15.78% – an impressive figure even compared to Dow Jones (13.36%).

Currently, the market fluctuates around 960-980 points. Despite the decline, this presents a good opportunity for investors to buy at suitable prices rather than during the overheated period of 2020-2021.

VN Index vs. International Indices

Compared to leading global indices like S&P 500, Dow Jones, or Nasdaq 100, the VN Index has notable differences:

Development level: The Vietnamese stock market is still young. The trading mechanism is not yet flexible (T+2), limiting foreign capital flow and increasing risks. Therefore, foreign investors still prefer US stocks.

Growth rate: This is a strength of the VN Index. With a growth of 550% over 12 years (from 2009 to 2024), averaging 45% annually, the Vietnamese stock market is among the fastest-growing markets regionally and globally.

This shows that: although small in scale, VN Index is an attractive destination for long-term investors, especially those seeking high growth opportunities.

VN Index and VN30: Similarities and differences

Similarities: Both VN Index and VN30 influence investor psychology. When the index rises, investors tend to realize profits; when it falls, they may cut losses or look for buying opportunities.

Differences:

In terms of definition: VN Index includes all stocks on the HOSE, while VN30 tracks only the 30 largest-cap companies.

In calculation method: VN Index is based entirely on market capitalization, without excluding illiquid stocks. VN30 applies free float adjustment (free float shares) and weight control, reflecting actual market movements more accurately.

Currently, VN30 accounts for over 80% of the total market capitalization, so when monitoring Vietnam’s stock market, investors usually pay attention to both indices for a comprehensive view.

Leading companies on the Vietnamese stock exchange

Top companies currently leading the VN Index include:

• Vietcombank (VCB) – Largest bank, market cap 500 billion VND
• BIDV (BID) – State-owned bank, 281 billion VND
• Vietinbank (CTG) – Leading bank, 174 billion VND
• Vinhomes (VHM) – A-grade real estate, 174 billion VND
• PV Gas (GAS) – Oil and gas exploration, 169 billion VND
• Hoa Phat (HPG) – Steel and minerals, 165 billion VND
• Techcombank (TCB) – Private bank, 163 billion VND
• Vingroup (VIC) – Conglomerate, 152 billion VND
• FPT (FPT) – Technology, 150 billion VND
• VPBank (VPB) – Private bank, 145 billion VND

The financial sector (banking) dominates the VN Index, indicating the market’s dependence on these stocks.

Conclusion: Is the VN Index worth following?

Although the VN Index has some limitations (such as the high weight of large companies, unflexible mechanisms), it remains an indispensable tool.

After 24 years of development since 2000, the Vietnamese stock market has proven its resilience after each crisis (2008, 2018, 2020). The 550% growth over 12 years demonstrates the potential of the VN Index.

Whether you are a professional investor or a beginner, understanding the VN Index will help you grasp market trends and make smarter investment decisions. In the context of global economic volatility, the VN Index is a worthy representative of Vietnam’s economic potential.