Vietnam Insight

▶ The index opened the trading session with an 8.01 points gain, continuing the recovery from the previous session. The recovery remained stable throughout the morning session; however, selling pressure from foreign investors pushed the index below the reference level. Bank stocks reversed course and returned to the reference level after news that Sacombank extended its restructuring plan until the end of 2030, slower than initially expected.

▶ At the close of trading, the VN-Index rose 3.54 points (+0.21%), reaching 1,713.83 points; the HNX-Index rose 0.92 points (+0.37%), reaching 247.78 points. Market liquidity continued to decline sharply during the recovery session, falling below the 20-day average, at 29.1 trillion VND, corresponding to 1,009 million shares traded. Foreign investors net sold VND 2,604 billion today, with the largest net selling value in VIC, STB, and VCB. Conversely, MSN, PLX, and GMD were the stocks with net buying.

▶ Technical perspective: The VN-Index started the session positively, rising nearly 30 points, with capital flowing into the financial sector while the energy sector continued to face selling pressure. However, the upward momentum lacked cash flow and quickly encountered selling pressure, causing the index to narrow its gains and retreat near its previous closing level. Price movements reflect investor caution amidst lingering uncertainties. At the close, the VN-Index remained above the MA200 line, with the RSI at a neutral level of 51. Meanwhile, foreign investors recorded strong net selling, mainly concentrated in VIC.

From a statistical perspective, we monitor the percentage of stocks trading above the 50-day moving average (EMA50) as an indicator to identify market bottoms. Historically, the VN-Index usually confirms a bottom when this percentage fluctuates between 30% and 40% and peaks around 60-70%. With the current figure at around 36%, the data suggests that many stocks have declined significantly recently.

In the base scenario: The VN-Index is expected to fluctuate in the 1,650–1,750 point range in the short term as investors await clearer signals of easing geopolitical tensions. If tensions ease, pressure on global oil prices may ease, thereby opening up the possibility of the Fed resuming its interest rate cutting cycle sooner. This could help improve risk sentiment in the market and support the stock market.

In the downside scenario: Prolonged disruptions in the Strait of Hormuz could further tighten global oil supply, keeping oil prices high for an extended period. This scenario increases the risk of stagflation (high inflation coupled with low economic growth). Historically, such environments are often unfavorable for the stock market and could lead to a deeper correction in the VN-Index.

Strategy: Investors should refrain from fully utilizing their buying power until there is greater clarity regarding geopolitical developments in Iran. During this period, priority should be given to sectors benefiting from domestic factors such as public investment, banking, and construction materials; at the same time, dips due to cross-margin call pressure may create opportunities to buy at attractive prices. Additionally, investors could consider commodity stocks given the current upward trend in commodity prices (e.g., fertilizers). However, this sector is often highly volatile, so careful risk management is necessary if market conditions change.