Vietnam Insight

▶ The VN-Index extended its decline on Tuesday, driven by strong selling pressure in the Oil and Gas sector. Demand emerged in some sectors with strong earnings, particularly the Financial sector, but remained limited, as evidenced by low trading volume. At the close, the market fell nearly 13 points, and the VN-Index formed a Doji candlestick, reflecting a tug-of-war between buying and selling. Foreign investors made net purchases of 72 billion VND during the session. Trading volume decreased compared to yesterday, corresponding to the 20-day average.

▶ At the close of trading, the VN-Index fell 12.95 points (-0.74%), closing at 1,730.56 points; the HNX-Index fell 3.67 points (-1.29%), reaching 280.74 points. Total trading volume across all three exchanges reached 24.7 trillion VND, equivalent to approximately 890 million shares traded. However, this figure includes a sudden block trade in LPB (approximately VND 6,000 billion). Foreign investors made a slight net purchase of VND 72 billion. The stocks with the strongest net selling were VIC (-VND 133 billion), FPT (-VND 110 billion), and GAS (-VND 69 billion)... Conversely, typical net buying included SHB (+VND 107 billion), HDB (+VND 90 billion), and VNM (+VND 81 billion)... 

▶ Technical perspective: Bottom-fishing demand emerged in several stock groups with positive business results, especially the financial sector, helping the VN-Index gradually stabilize despite continued selling pressure from margin calls on July 21st. In the afternoon session, unfavorable rumors triggered strong selling pressure in the oil and gas sector, causing the index to close down 12.95 points. The VN-Index formed a Doji candlestick, reflecting a tug-of-war situation as supply and demand gradually balance out after the previous sell-off.

The RSI fell to 28, moving deeper into the oversold zone, thus opening up the possibility of a technical rebound in the coming sessions. However, it is still too early to confirm whether the July 20th session was a selling climax (washout). The development of demand in the remainder of the week will play a crucial role in determining whether the market can form a short-term bottom or continue its corrective trend. Many stocks have now retreated to attractive valuation levels, approaching historical lows. If the VN-Index quickly regains the MA200 mark and maintains a structure of higher lows, the medium-term uptrend will remain intact. Conversely, if selling pressure continues to prevail, the index may retreat to test the 1,600-point support level, corresponding to the lower boundary of the previous accumulation zone.

In the positive medium-term scenario: In an optimistic scenario, a less tense inflation outlook will create room for more flexible monetary policy, supporting market valuations. Companies maintaining good profit growth and trading at appropriate valuations despite high domestic interest rates could be good investment opportunities for the medium to long term. Under this scenario, the VN-Index is expected to reach the 2,000-2,100 point range in the second half of 2026. However, any recovery sessions in the remaining weeks of July must demonstrate strong buying pressure at the bottom.

In the base medium-term scenario: Conversely, if net selling pressure from foreign investors continues, and domestic interest rates continue to rise, leading to decreased market liquidity, the VN-Index may lack positive new capital inflows and is likely to consolidate sideways within the 1,750-1,850 point range in the second half of 2026. Weakening VIC and VHM stocks could cause the VN-Index to retest the lower boundary of the previous sideways range – around 1,580 points. Furthermore, the renewed geopolitical tensions between Iran and the US, along with the possibility of the Fed maintaining high interest rates, could be external factors contributing to this negative scenario, putting pressure on exchange rates and foreign capital flows into emerging markets like Vietnam.

Strategy: Investors can focus on selecting stocks with sideways price accumulation structures and strong business growth results instead of solely focusing on VN-Index fluctuations for medium-term positions. In the short term, consider stocks that have been heavily sold off and are showing signs of recovery, such as insurance, technology, and real estate sectors. Investors should limit the use of margin when the trend is not clearly defined during this period. For companies with poor business prospects after the Q2/2026 results are announced, investors may consider reducing their holdings to manage risk.