VN-Index Outlook: Anticipating a Return to the Uptrend
Building on the positive momentum from the previous week, VN-Index kicked off September with two consecutive gaining sessions. For the first time in history, the benchmark surpassed the 1,700-point threshold before experiencing a sharp correction in the final session of the week.
Wrapping up the week of September 3-5, the VN-Index declined by 0.91% to 1,666.97 points. There was a noticeable shift in investment flows from banking stocks to other sectors, including steel, real estate, and mid-cap stocks.
In terms of foreign investment value, foreign investors continued to offload large volumes, amounting to thousands of billions of VND. Cumulatively, over the three sessions, foreign investors net sold more than 5,211 billion VND.
According to several analysts, the correction in the final session was entirely expected after the index had covered a significant distance in a short period. So, what’s next for the market, and how should investors strategize for the upcoming week?
VN-Index Expected to Resume its Uptrend
Nguyen Tien Dung – Head of Industry and Stock Research, MBS Securities Joint Stock Company
Mr. Dung observed that the VN-Index’s decline of 29.3 points, or 1.73%, to 1,667 points on September 5, following its record high, is considered a healthy correction. This phase serves as a necessary pause for the market after a robust upward movement since the 1,614-point low on August 25, indicating short-term profit-taking rather than a weakening of the overall trend.
A positive sign is the sustained high trading volume, with the total matching value across the market exceeding 49 trillion VND. Strong buying pressure at the end of the session demonstrates that funds have not exited the market but are instead waiting for opportunities to rotate between different stock groups. Despite the net selling by foreign investors in the recent period, domestic investors, especially individual investors, have dominated the market and acted as the primary driving force.
The MBS expert attributes the recent rally to a confluence of factors: expectations of a market upgrade, a stable macroeconomic foundation with impressive GDP growth, and low-interest rates, which have collectively fueled liquidity, consistently surpassing 47-50 trillion VND per session. Therefore, Mr. Dung believes that short-term corrections, like the one witnessed on September 5, do not alter the overall positive trajectory.
The market retains its solid foundation and is likely to resume its uptrend as buying pressure absorbs profit-taking activities.
In an optimistic scenario, if Vietnam is upgraded to an emerging market status by FTSE on October 7, foreign capital could return to anticipate the official reclassification in March 2026. Consequently, the VN-Index would have the potential to reach the 1,800 mark this year. This projection is based on the assumption of a 20% profit growth for listed companies in 2025 and a possible P/E ratio of 14.5x for the VN-Index.
Previous waves of market enthusiasm were primarily driven by expectations and rumors of an upgrade. As a result, money flowed in and out rapidly, lacking sustainability. In the current phase, with the official upgrade on the horizon, the impact is expected to be more tangible as ETF funds will need to reallocate their portfolios according to the new weightings.
Mr. Dung estimates that the Vietnamese stock market will receive an allocation of approximately 1% of the total $85 billion in assets under management by passive funds tracking the FTSE EM index. The upcoming upswing is anticipated to attract a higher proportion of investment funds, leading to more widespread and sustainable improvements in market prices and liquidity, pushing both metrics to new highs.
Foreign investors’ stock selection and portfolio restructuring will likely favor stocks that meet FTSE index criteria: large market capitalization, high liquidity, favorable free-float ratio, and sufficient room for foreign ownership. Consequently, stocks that may attract foreign investment include those in the VN30 group (VIC, VHM, VRE, STB, SHB, HPG, SSI, MSN, VNM, DGC) and large-cap stocks (EIB, GEX, KBC).
Overall, the prominent factor supporting business operations is the current monetary policy easing. As a result, the primary beneficiaries are banks, securities companies, and real estate enterprises. “However, investment opportunities may not be evenly distributed across the entire industry but could be concentrated in a few attractively valued companies with outstanding growth prospects and new narratives, such as digital currencies and financial hubs,” Mr. Dung emphasized.
Caution Advised: Avoid New Investments for Now
Nguyen Tan Phong – Pinetree Securities’ Stock Market Expert
According to Mr. Phong, Vietnam’s stock market delivered several surprises to investors during the first trading week of September.
Just as the market was brimming with enthusiasm, having surpassed the all-time high and reached 1,711 points, the final 30 minutes of Friday’s session, particularly the ATC session, witnessed a sudden wave of profit-taking, causing the VN-Index to plummet by up to 40 points, despite the absence of any negative news.
Many stocks that had surged in the morning returned to reference prices or even plunged deeply, including banking, securities, and real estate stocks. Foreign investors continued their net selling spree. Statistics show that foreign organizations net bought nearly 9,000 billion VND in July, and we had high hopes for a VN-Index upgrade by FTSE in September this year.
Mr. Phong noted several pieces of information that bolstered this belief, such as FTSE’s meeting with SSC and the positive signals it conveyed, as well as rumors about Vanguard, the world’s second-largest fund, opening a trading account at SSI and Vietcap. However, an unexpected development unfolded as foreign organizations net sold nearly 29,000 billion VND throughout August and the first week of September, and domestic investors had to absorb this selling pressure to sustain the VN-Index’s upward trajectory.
Looking ahead to the upcoming week, Mr. Phong predicts that the first session will be crucial in signaling the short-term direction of the market.
From a technical perspective, the VN-Index has support at 1,645 (MA20). If this level holds, the market may experience a technical rebound and consolidate around the 1,67x range. However, in a more pessimistic scenario, if negative news emerges, the VN-Index could correct towards the 1,580-1,600 range.
Therefore, investors are advised to proactively manage their portfolios, reducing their equity exposure to safe levels, and refrain from making new investments at this juncture. Additionally, upcoming events that could influence global stock markets include the release of US inflation data for August on September 10-11 and the Fed’s announcement of its benchmark rate a week later.
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