Vietnam Insight

▶ The market faced strong downward pressure during Thursday's session as it approached the 1,800 mark. Despite opening in the green and holding steady during the morning, a surge in selling pressure in the afternoon caused many stocks to pull back. Contrary to their usual role of supporting the market, the VIC-VHM duo led the decline, accounting for nearly 15 points of the VN-Index's total drop. Market liquidity rose to VND 20 trillion, while increased net selling by foreign investors also weighed on market sentiment. The VN-Index closed at 1,765, a decline of 27.5 points.

▶ At the close, the VN-Index fell 27.55 points (-1.54%) to 1,765.63 points, while the HNX-Index dropped 5.11 points (-1.77%) to 283.34 points. Total liquidity across the three exchanges reached VND 20 trillion, with approximately 833 million shares traded. Foreign investors were net sellers to the tune of VND 573 billion, with notable selling in TCB (-VND 170 billion), VHM (-VND 160 billion), and VIC (-VND 126 billion). Conversely, major net-bought stocks included GEX (+VND 117 billion), LPB (+VND 98 billion), and SSI (+VND 97 billion).

▶ Technical perspective: Selling pressure intensified towards the end of the session, with the VIC stock group accounting for nearly half of the VN-Index's decline. Market breadth narrowed, and foreign investors returned to net selling, focusing primarily on VIC, VHM, and TCB. A meeting between the State Bank of Vietnam (SBV) and commercial banks reinforced the policy stance of controlling interest rate levels to support market liquidity and economic growth; banks that fail to lower lending rates could face reduced credit quotas in 2027. Despite the positive outlook for lower interest rates, investor sentiment remained cautious as real estate stocks continued to correct and most banking stocks closed in the red. On the daily chart, the VN-Index continued to trade within the ATR range while liquidity held steady around the average level, suggesting that selling pressure remains largely under control.

From a technical perspective, the VN-Index is currently trading between the MA200 and MA50, showing signs of improving buying interest. However, demand is not yet strong enough to drive a decisive breakout from the current 1,780–1,800 point consolidation zone. A strong rally—fueled by sufficient buying power to push the index decisively past the 1,800-point mark—would reinforce our view that the market's recovery trend remains intact.

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.