Building stocks draw interest as public investment ramps up

Public investment continues to be identified as a key pillar for driving economic growth in 2026, particularly as monetary policy has limited room for further easing. Accelerated disbursement from the first quarter (Q1) has reinforced expectations of a new growth cycle for construction firms.

On April 9, on behalf of the Prime Minister, Minister of Finance Ngo Van Tuan presented to the National Assembly a public investment plan for the 2026-2030 period, with total capital of $328.8 billion – 2.7 times higher than the previous five-year period.

Recent trading sections show that the construction and materials sectors have seen some improvement in capital inflows, though not yet strong enough to confirm a sustained uptrend.

Accelerating public investment is expected to entail a new growth cycle for construction firms

Stocks such as HHV, VCG, and HPG have posted positive rebounds, but these have been largely technical and not accompanied by a significant increase in institutional capital inflows.

From a cautious perspective, Le Duc Khanh, head of Research at VPS Securities, noted that building stocks remain in an accumulation phase without clear breakout signals.

“Market capital flows continue to favour large-cap stocks, particularly the banking sector and VN30 constituents, which offer solid fundamentals and strong index-leading capacity,” he said. “A key factor limiting a strong surge in capital flows into the sector is the lag between policy implementation and business results.”

The VN30 Index tracks the 30 largest and most liquid companies listed on the Ho Chi Minh City Stock Exchange.

According to Tran Anh Tuan, director of the analysis centre at Petrovietnam Securities, public investment disbursement is only the starting point.

“Once capital is allocated, projects require time to complete procedures, begin construction, and undergo acceptance processes. As a result, corporate earnings typically reflect these developments only after one to two quarters.

In addition, the construction sector is characterised by high financial leverage, making companies sensitive to interest rate fluctuations. Rising financing costs, along with extended payment cycles and receivables pressure, can weigh on business performance even when revenue is growing,” he noted.

At present, capital inflows into construction and materials stocks remain tentative and lack broad-based momentum. Gains have been concentrated in select stocks rather than forming an industry-wide trend.

Divergence within the sector is expected to become more pronounced. Accordingly, companies with strong execution capabilities and large backlogs (referring to signed but unfulfilled contracts) will have a clear advantage in translating public investment into actual business results.

Conversely, firms with weak financial foundations, heavy reliance on debt, or difficulties in receivables collection may face greater risks, even as the sector benefits from supportive policies.

Across the value chain, opportunities from public investment extend beyond construction contractors to related industries.

Le Duc Khanh from VPS Securities noted that in the construction and infrastructure segment, companies directly involved in project execution and operation stand to benefit the most.

“Notable names include HHV in transport infrastructure, VCG, C4G, FCN, and LCG – stocks highly sensitive to contract wins, backlog levels, and disbursement progress. Meanwhile, building materials companies tend to react earlier, driven by expectations of rising demand,” he said.

Steel major Hoa Phat Group stands out thanks to its large market share and dual benefit from accelerating public investment and recovering domestic demand.

Construction stone producers such as KSB, DHA, and VLB, as well as asphalt companies like PLC, are also expected to benefit from increasing demand for raw materials.

“Industrial park developers, including BCM, KBC, IDC, and SZC, may also benefit indirectly as improved transport infrastructure boosts investment inflows and enhances land values,” Khanh said.

In the absence of a prevailing capital flow trend, investors are supposed to adopt a highly selective approach to construction stocks.

Tran Anh Tuan at PetroVietnam Securities recommends prioritising companies with large backlogs, involvement in key projects, and the ability to ensure construction progress – critical factors in translating policy into earnings.

“Furthermore, financial health is crucial, particularly in a volatile interest rate environment. Companies that effectively manage leverage and cash flow will be more resilient,” he said.

He also called on investors to monitor profit margins and cost control capabilities amid rising raw material prices.

“Finally, valuation must be carefully considered. Stocks that have surged on expectations without corresponding earnings improvements may face short-term correction risks,” he stated.

Despite lingering short-term uncertainties, the medium-term outlook for construction and materials stocks remains positive. Institutional capital may return more strongly in the coming quarters. However, a sustainable uptrend will require alignment across multiple factors, including project progress, interest rate conditions, and corporate cost control capabilities.

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