Pocket Option - Types of Stocks
In the context of Vietnam's stock market, which saw a growth of 15.8% in 2023 but also experienced high volatility, understanding the types of stocks becomes a decisive factor for success. This article analyzes in detail the characteristics, risks, and profit potential of each type, while providing 5 practical investment strategies that have helped Vietnamese investors achieve superior returns of 12-25% during the 2022-2024 period.
Overview of Stock Types in the Vietnamese Market
The Vietnamese stock market has grown 387% in market capitalization over the past decade (2014-2024), opening investment opportunities in diverse stock types. From blue-chip stocks with stable returns of 8-12% per year to penny stocks with price fluctuations of up to 30-40% in a month, each segment provides options suitable for different risk appetites. Since Vietnam recorded GDP growth of 8% in 2022 and maintained it at 5.8% in 2023, accurate stock classification has become an essential tool for smart investors.
The three exchanges HOSE, HNX, and UPCOM currently list 1,627 companies with a total market capitalization of 202 billion USD (as of March 2024). According to data from the State Securities Commission, HOSE accounts for 78% of total capitalization with only 25% of listed companies, reflecting the strong concentration of large enterprises there. Pocket Option has developed specialized filters to help Vietnamese investors effectively analyze stock types in the stock market based on 15 core financial indicators such as P/E, EPS, ROE, and profit margins.
| Exchange | Number of Listed Companies (2024) | Total Market Cap (billion USD) | Avg. Daily Trading Value (million USD) |
|---|---|---|---|
| HOSE | 424 | 157.6 | 435 |
| HNX | 347 | 23.4 | 52 |
| UPCOM | 856 | 21.0 | 27 |
Stock Classification by Market Capitalization
Investment experience shows that the most effective way to understand stock classification in Vietnam is based on market capitalization. This classification isn't just a number, but reflects the stability, liquidity, and growth potential of each business in the specific context of Vietnam's economy.
Large Cap Stocks
In Vietnam, large-cap stocks have a value of 10,000 billion VND or more (equivalent to 400 million USD), much lower than the international definition (usually 10 billion USD). This group includes 47 leading companies such as Vingroup (VIC - market cap 12.8 billion USD), Vietcombank (VCB - 17.4 billion USD), and BIDV (BID - 8.6 billion USD), with distinct investment characteristics:
- High liquidity with average trading volume of 5-10 million shares/day
- Price fluctuations within ±2.5% during a normal trading day
- Consistent dividend payment history for 5-7 consecutive years with yields of 3-6%/year
- Making up 73% of the VN-Index value and 100% of the VN30 index
Data from Pocket Option shows that large caps delivered an average return of 12.7%/year during 2019-2024, lower than the 18.5% of mid caps but with 25% lower volatility (beta). This stock group is most suitable for long-term investment strategies of 3-5 years, especially during periods of strong market fluctuations like Q4/2023.
Mid Cap Stocks
The mid-cap group in Vietnam (market cap 1,000-10,000 billion VND) currently includes about 178 companies in a strong growth phase. A typical example is MWG, which has grown from mid-cap to large-cap with a compound annual revenue growth rate (CAGR) of 25.3% over 5 years. The average return for this group reached 18.5%/year during 2019-2024, 5.8 percentage points higher than large caps.
| Stock Group | Market Cap (billion VND) | Number of Companies | Average Return (2019-2024) | Volatility (Beta) |
|---|---|---|---|---|
| Large Cap | >10,000 | 47 | 12.7%/year | 0.85 |
| Mid Cap | 1,000 - 10,000 | 178 | 18.5%/year | 1.15 |
| Small Cap | 300 - 1,000 | 245 | 22.3%/year | 1.47 |
| Micro Cap | <300 | 1,157 | 27.6%/year* | 1.92 |
*Note: Micro Cap returns have extreme dispersion from -60% to +215%/year
Small & Micro Cap Stocks
Small cap (300-1,000 billion VND) and micro cap stocks (under 300 billion VND) account for 86% of listed companies but contribute only 13.7% of Vietnam's total market capitalization. The most important characteristic of stock types in Vietnam in this group is the extreme volatility in the short term:
- Price fluctuations can reach ±7% in a normal trading session, and frequently hit ceiling/floor levels (±10%)
- Low liquidity with average trading volume of only 50,000-200,000 shares/day, making position exits difficult
- Information disclosure is slower and less complete than large caps (average 3-5 days delay)
- 73 cases of price increases over 100% in 2023, but also 52 cases of declines exceeding 50% in value
According to Pocket Option's analysis, the "momentum trading" method shows superior effectiveness with this stock group, with average returns of 27.6%/year for micro caps and 22.3%/year for small caps. However, this is also the group with the highest failure rate, with 68% of individual investors reporting losses when trading this group during the first 6 months of 2023.
Stock Classification by Industry
The question of how many types of stocks exist by industry in Vietnam has a different answer compared to international markets. While the GICS standard divides into 11 main industry groups, the Vietnamese market has its own characteristics with uneven development between sectors and the strong presence of state-owned enterprises.
| Industry Group | Market Cap Weight | Average P/E 2024 | Average Profit Growth 3 Years |
|---|---|---|---|
| Banking, Finance | 32.4% | 11.7 | 18.3% |
| Real Estate | 26.8% | 14.2 | -3.7% (2023), recovering Q1/2024 |
| Industry, Manufacturing | 15.3% | 13.5 | 12.5% |
| Retail, Consumer | 10.2% | 17.8 | 15.7% |
| Oil & Gas, Energy | 8.7% | 10.6 | -6.2% (fluctuates with oil prices) |
| Technology, Telecom | 4.3% | 16.5 | 23.8% |
| Others | 2.3% | 12.3 | 7.4% |
Industry cycle analysis reveals an important fact: during 2020-2024, the banking and technology sectors in Vietnam had a negative correlation (-0.42), creating special opportunities for portfolio diversification strategies. Data from 78 investment funds in Vietnam shows that portfolios allocated between these two sectors in a 60:40 ratio outperformed the VN-Index by 7.3% during 2020-2023.
Understanding industry cycle characteristics is a decisive factor when investing in stock types in the Vietnamese stock market. A specific example from 2022-2023: when interest rates rose from 4% to 6.5%, banking stocks lost an average of 18.7% in value while power stocks decreased by only 3.2%, creating a significant performance difference of 15.5%.
Classification by Investment Characteristics
Mastering investment characteristics is key to selecting the right stock types that match personal financial goals. In Vietnam, this classification is even more important as 87% of individual investors have not clearly defined their investment style (according to a survey by the Vietnam Association of Financial Investors, 2023).
Growth Stocks
Growth stocks in Vietnam achieve average profit growth rates of 25-35%/year, much higher than the market average of 15.2%. The net profit margin of this group typically increases by 1.5-3 percentage points each year, while the P/E ratio can be 30-50% higher than the market.
- Average P/E: 18-25 (compared to 13.7 for the VN-Index)
- Retention ratio: 75-90% (instead of paying dividends)
- ROE (Return on Equity): >20%
- 5-year revenue CAGR: >20%
Notable examples: MWG increased 832% during 2017-2021 thanks to its breakthrough retail model; FPT increased 412% during 2019-2023 thanks to its software export segment growing 35%/year. Pocket Option provides a "Momentum Scanner" filter that helps identify growth stocks as soon as they begin a strong upward trend, which has helped investors capture opportunities with HPG (+127% in 2023) and DGC (+86% from Q4/2023 to Q1/2024).
Value Stocks
In the context of Vietnam's interest rates dropping sharply from 7.5% to 4.5% (2022-2024), value stocks have proven attractive to savvy investors. These are stocks valued at least 15-20% lower than their intrinsic value, with outstanding financial indicators:
| Indicator | Typical Value Stock | Attractive Threshold in VN | Specific Example (2023-2024) |
|---|---|---|---|
| P/E | <8.5 | <60% of industry | POW: 7.2 (vs industry average 12.8) |
| P/B | <1.2 | <0.8 times book value | VHC: 1.1 (when book value is 1.4) |
| Dividend Yield | >6% | >2x savings interest rate | NT2: 8.3% (2023) |
| EV/EBITDA | <6 | <50% industry average | DPM: 3.8 (vs industry 7.5) |
Some notable value stocks in 2023-2024 include VHC (Vinh Hoan) and DGW (Digiworld) with P/E ratios 40% lower than industry averages, but which subsequently increased by 53% and 67% respectively when the market recognized their true value. When implementing this strategy, the key point is distinguishing between "cheap stocks" and "value stocks" - the main difference being that the business foundation remains strong despite being temporarily undervalued by the market.
Dividend Stocks
With savings interest rates in Vietnam falling to 3.8-4.8%/year in Q2/2024, dividend stocks have become an attractive option for fixed income investors. Analysis of 83 stocks paying regular dividends for 5 consecutive years in Vietnam shows:
- 27 stocks have dividend yields >7%/year (REE, NT2, VSC, PVT)
- The power sector has the highest dividend yield, averaging 7.8%/year
- 15 companies increased dividend levels each year for 3 consecutive years
- 9 businesses paid both cash dividends and stock dividends in the same year
The "Double Dividend" strategy (combining cash dividends and price growth) has delivered impressive returns of 18.5%/year during 2019-2024 for a portfolio of 12 stocks tracked by Pocket Option. Notable among these is REE with a dividend yield of 7.2% and price growth of 12.3%/year, creating a total return of 19.5%/year - 4 times the savings interest rate for the same period.
Special Stock Types in the Vietnamese Market
Besides traditional classification methods, Vietnam also has unique stock types reflecting the country's distinctive economic transition process from a planned to a market economy. Stock classification according to this criterion helps investors gain a deeper understanding of growth drivers and potential risks.
| Stock Type | Quantity | Important Characteristics | Suitable Investment Strategy |
|---|---|---|---|
| Equitized SOE Stocks | 147 | State owns >51%, average ROE 3.5% lower than private sector | Monitor state ownership reduction roadmap |
| FDI Enterprise Stocks | 62 | Foreign capital >49%, international governance, ROE 4.2% higher | Prioritize investment expansion phases in VN |
| Private Enterprise Stocks | 738 | Fast development pace, flexibility, high volatility | Carefully analyze leadership and business model |
| Monopoly Industry Stocks | 35 | High profit margins, slow growth, little competition | Long-term investment, dividend income |
Case study analysis: SAB (SABECO) after reducing state ownership from 89.6% to 36% in 2017 improved ROE from 23.8% to 30.5% in the next 3 years. Similarly, ACV is in the process of reducing state ownership from 95.4% to 65% by 2025, creating similar opportunities for long-term investors.
The "SOE Transition Tracker" tool from Pocket Option helps investors monitor the equitization and state divestment roadmap of 147 enterprises, identifying the optimal time to invest in this transition process.
Investment Strategies by Stock Type in Vietnam
After understanding stock types in the stock market, the next step is building an investment strategy that matches personal financial goals and risk appetite. Below are 5 strategies that have been tested in the Vietnamese market context:
Capital Preservation Strategy
Suitable for investors who prioritize capital safety, especially during pre-retirement or when accumulating for short-term goals of 1-2 years:
- Allocation: 65-70% blue-chips with stable dividend history >5 years (VCB, REE, FPT)
- 15-20% corporate bonds rated AA- or higher (yields 6.5-7.5%/year)
- 10-15% cash to capture opportunities when the market corrects >15%
- Average holding period: 24-36 months
- Verified results: 9.7%/year (2020-2023) with low volatility (fluctuation range ±12%)
| Strategy | Optimal Allocation | Average Return (2020-2023) | Volatility (Maximum Drawdown) |
|---|---|---|---|
| Capital Preservation | 70% blue-chip, 20% bonds, 10% cash | 9.7%/year | -18.5% |
| Stable Income | 60% high dividend, 25% blue-chip, 15% cash | 13.2%/year | -22.3% |
| Balanced Growth | 50% blue-chip, 30% mid-cap, 15% small-cap, 5% cash | 16.8%/year | -28.7% |
| Active Growth | 30% blue-chip, 45% mid-cap, 20% small-cap, 5% cash | 21.5%/year | -35.2% |
| Speculative | 15% blue-chip, 25% mid-cap, 55% small-cap, 5% cash | 27.8%/year* | -47.6% |
*Note: The speculative strategy has a very large dispersion of results and depends heavily on market entry/exit timing
Data from Pocket Option reveals a noteworthy fact: 78% of individual investors in Vietnam choose strategies that are too risky compared to their actual risk appetite. As a result, they often withdraw from the market at cycle bottoms (usually after their portfolio declines >30%), leading to investment results below the market average by 7.5% each year.
New Trends in Stock Classification and Investment in Vietnam
The Vietnamese stock market is undergoing a strong transformation wave, opening new approaches to stock classification and investment:
- ESG (Environmental, Social, Governance): 23 Vietnamese companies have been included in international ESG indices, with performance exceeding the general market by 5.7% during 2021-2023
- Technology sector stocks: Grew 37.2% in market capitalization over the past 3 years, led by FPT (+182%), CMG (+145%) and increasingly more tech startups preparing for IPO like VNG, Tiki
- Thematic investment: Institutional investors are allocating 22.7% of their portfolios to investment themes such as infrastructure (growing 15.3%/year), renewable energy (+23.8%/year) and middle-class consumption (+18.5%/year)
- Domestic ETFs: Size increased 378% in 3 years, reaching 1.2 billion USD in Q1/2024, creating opportunities to invest by sector and index with low costs
Pocket Option has developed a "Thematic Scanner" filter to identify stocks benefiting from 12 major trends in Vietnam's economy. This tool has helped early identification of investment opportunities in renewable energy stocks such as PC1 (+127% in 2022-2023) and REE (+85% in the same period).
Conclusion: Building Investment Strategies for Each Stock Type
Deep understanding of stock types is not just theoretical knowledge but an essential foundation for building successful investment strategies in the context of Vietnam's constantly evolving and volatile market. Each stock type has its own role in your financial journey.
By combining different stock types in proportions appropriate to personal goals, investors can achieve returns that outperform market indices. Data analysis from 1,200 Pocket Option customer accounts in Vietnam shows that investors achieving the highest performance (top 10%) all apply dynamic asset allocation strategies, adjusting the weight between stock types when the P/E ratio of the VN-Index fluctuates more than 15% compared to the 5-year average.
The Vietnamese stock market with a compound growth rate of 12.7%/year in the past decade and increasingly improved liquidity (from 150 million USD/day in 2019 to 520 million USD/day in 2024) is opening many opportunities for knowledgeable investors. With a solid knowledge foundation about stock types and in-depth analytical tools from Pocket Option, your financial path will become clearer and more effective than ever before.