The VN-Index made significant gains this week, rising 1.4% on Monday to 1,332.5 points after global financial markets reacted positively to the news that the US delayed imposing a 50% tariff on imports from the European Union until July 9th.
Notably, export-oriented stocks such as textiles and seafood hit their daily limit gains following positive developments in Vietnam-US trade negotiations. The upward momentum was maintained in mid-week sessions, led by real estate stocks, with the VN-Index reaching a 3-year high of 1,348.3 points on Thursday.
However, profit-taking pressures intensified, pulling the VN-Index back to the reference level by the end of Thursday’s session and into negative territory on Friday. The index closed the week at 1,332.8 points, up 1.4% from the previous week’s close.
Commenting on the market movements, Mr. Dinh Quang Hinh, Head of Macroeconomic and Market Strategy Analysis at VnDirect, noted that if we look closely at the week’s transactions, we can see that the upward momentum was concentrated in a few stocks within the real estate, textiles, and seafood sectors. In contrast, many stock groups witnessed noticeable corrections in the latter part of the week, notably in banking and retail stocks.
It appears that funds are flowing into a select group of stocks with unique stories, and the market’s upward trend lacks broad-based consensus and momentum.
As we move into the next trading week, the market is likely to continue its accumulation trend to absorb profit-taking selling pressure and await new supportive information. The 1,340-1,350 range will remain a strong resistance level in the short term, especially given the foreign investors’ recent strong net selling. Conversely, the 1,300-1,320 range will act as a support level for the market.
With the market continuing to fluctuate, investors should maintain a moderate equity ratio and consider partial profit-taking on stocks that have made significant gains recently. If the VN-Index retraces to the 1,300-1,320 range, new investments with low ratios could be considered in sectors that have not fully recovered to early April levels (before the US announced its lack of counterparts), such as banking, securities, steel, textiles, and seafood.
In terms of valuation, according to MBS Securities, the market’s current P/E (ttm) stands at 13.63, up from 12.3 at the beginning of May, higher than one standard deviation (13.42), but still lower than the early April level (14.63) when it was in the price range. Additionally, the market is trading at a valuation 18.8% lower than its historical average (16.81), presenting a potential opportunity for long-term investors.
The VN-Index ended May with a gain of +106.3 points (+8.67%), marking the strongest monthly increase since August 2023. The Vingroup contributed nearly 50 points to this rise (VIC: 27.4 points, VHM: 18.5 points). As the market recovered from April’s lows, most stock groups enjoyed good profit margins. However, to outperform the market (VN-Index: 8.67%), only a few groups outperformed: Vingroup (+37%), Textiles (+20%), Real Estate (+18%), Industrial Real Estate (+12%), and Logistics (+9.5%).
Average trading volume over the past three weeks has been maintained at VND 25,600 billion, providing an environment for funds to rotate into mid- and small-cap stocks, particularly those in the export and real estate sectors, as large-cap stocks/blue chips struggle near their peaks, except for Vingroup. Speculative funds tend to move in and out of positions quickly, and the market witnessed profit-taking in speculative stocks during the last two sessions of the week.
With just over a month left in the tariff negotiation deadline, the market’s dominant narrative could be positively influenced by a favorable outcome, building on the strong performance of export-oriented stocks over the past week and month.
In a less favorable scenario regarding tariffs, the market would likely experience a short correction before funds rotate back into domestic stocks.
Technically, over the past seven years, June has not been a month with a high probability of gains (2 out of 7 months showed increases). The market is currently facing resistance in terms of both index and liquidity, suggesting the potential for a short-term corrective phase.
In the base case scenario, the VN-Index is expected to correct towards the support area around 1,300 points without altering the market’s upward trend. In a cautious scenario, the market could be influenced by movements in the gold market, and there is evidence of distribution in many stocks. However, the medium-term upward trend may remain intact, at least above the 1,270-point region.
Investors should refer to support levels in specific stocks rather than the general index and closely manage their portfolios, reducing leverage and adjusting their stock/cash ratios to safer levels. The market is likely to undergo strong differentiation, making it increasingly challenging to pick the right stocks. Some sectors to consider when restructuring portfolios include Banking, Real Estate, Logistics, Public Investment, and Electricity Production and Distribution.
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