Vietnam Insight

▶ The VN-Index declined during Thursday's trading session. Despite facing selling pressure, liquidity remained low, indicating that profit-taking was not overwhelming—a normal development given that the index has rebounded over 100 points from the 1,650-point low. Overall, the market requires periods of volatility to absorb the volume from "bottom-fishing" before continuing its ascent to higher levels. Foreign investors shifted to net selling, though the volume was modest at VND 120 billion.

▶ At the close, the VN-Index fell 11.68 points (-0.66%) to finish at 1,764.78 points, while the HNX-Index dropped 0.95 points (-0.32%) to 292.64 points. Total liquidity across the three exchanges reached VND 16.6 trillion, with approximately 669 million shares traded. Foreign investors were net sellers to the tune of VND 120 billion—following three consecutive sessions of net buying—with notable sales in VHM (-VND 241 billion), VPB (-VND 120 billion), and PNJ (-VND 53 billion). Conversely, notable net buys included VIC (+VND 229 billion), CTG (+VND 54 billion), and GMD (+VND 34 billion).

▶ VHM (+0.78%), DGC (+6.91%), VNM (+0.57%) were the top contributors to supporting the VN-Index. On the downside, VCB (-0.55%), CTG (-1.57%), MBB (-1.65%) were the biggest drags on the index.

▶ Technical perspective: The VN-Index continues to face correction pressure; however, selling pressure remains low, and intraday volatility has been relatively limited. After rebounding nearly 9% from the lows in just over a week, market corrections are a normal technical development. Buying capital is being deployed cautiously, while selling pressure remains moderate, given that market valuations are still low—approaching levels seen during past crises.

We expect the VN-Index to fluctuate within the 1,750–1,800 point range in the short term as buyers and sellers test each other's strength before a clearer trend emerges. If market liquidity remains robust enough to absorb profit-taking at this resistance level, the index could resume its medium-term uptrend. Conversely, if selling pressure intensifies significantly around the 1,800-point mark, it would indicate that the current recovery requires further consolidation before a more sustainable uptrend can begin.

In the positive medium-term case: In an optimistic scenario, easing inflationary pressures would create room for more flexible monetary policy, thereby supporting market valuations. Companies maintaining solid profit growth and trading at reasonable valuations—despite persistently high domestic interest rates—may present attractive investment opportunities for the medium to long term. Under this scenario, the VN-Index is expected to target the 2,000–2,100 point range in the second half of 2026. However, any recovery sessions during the remainder of July must demonstrate strong "bottom-fishing" demand.

In the base medium-term case: Conversely, if net selling pressure from foreign investors persists and domestic interest rates continue to rise—thereby dampening market liquidity—the VN-Index may lack fresh, positive capital inflows. It would likely trade sideways within the 1,750–1,850 point range during the second half of 2026. Weakness in the VIC and VHM stock groups could cause the VN-Index to retest the lower bound of the previous sideways range—around the 1,580–1,600 point level. Additionally, renewed geopolitical tensions between Iran and the US, combined with the likelihood of the Fed maintaining high interest rates, could reinforce this negative scenario by pressuring exchange rates and foreign capital flows into emerging markets like Vietnam.

Strategy: Investors can capitalize on market corrections to deploy capital incrementally while maintaining a reasonable cash position for risk management, remaining ready to increase exposure once a market recovery trend is confirmed. Investors should avoid using leverage (margin) to "catch the bottom," as the market may form a secondary low. Furthermore, technical rebounds offer opportunities to restructure portfolios by divesting from companies that are underperforming relative to expectations.