Vietnam Insight

▶ In the first trading session following the holiday break, market sentiment was relatively weak as mounting selling pressure pushed the VN-Index back toward the 1,800-point level during the morning session, at one point falling nearly 30 points below the reference level. However, buying interest returned in the afternoon, helping many stocks pare losses, and the index ultimately closed down by only 4.4 points. From a technical perspective, this was a fairly successful test of the 1,800 support zone, with the formation of a long lower-shadow candlestick, indicating the presence of buying demand at lower price levels. Market liquidity remained broadly unchanged, while foreign investors expanded their net selling activities.

▶ At the close, the VN-Index declined 4.4 points (-0.24%) to 1,827.72 points, while the HNX-Index fell 2.53 points (-0.89%) to 282.24 points. Combined trading value across the three exchanges reached VND 18.5 trillion, equivalent to approximately 696 million shares traded. Foreign investors recorded net sales of VND 1.531 trillion, with the largest net-selling names being VCB (-VND 215 billion), VPB (-VND 173 billion), and VIC (-VND 155 billion). On the other hand, notable net-buying stocks included DPM (+VND 46 billion), VIX (+VND 48 billion), and VPI (+VND 32 billion).

▶ Technical perspective: The market remained under selling pressure for most of the session, reflecting investor caution ahead of macroeconomic developments related to the Federal Reserve (Fed) and movements in global bond markets. Nevertheless, a strong late-session recovery helped narrow the decline from nearly 20 points to just over 4 points. However, excluding VIC’s contribution of roughly 14 index points, the VN-Index would effectively have been down close to 20 points, indicating that broad-based corrective pressure remains present. That said, the selling activity appears primarily short-term in nature, and trading volume has yet to signal any significant panic selling. Market volatility and the absorption of supply around resistance levels are considered healthy developments, helping to ease excessive optimism while establishing a stronger price base for the next upward move. In the coming sessions, should liquidity continue to improve and capital flows remain supportive, the VN-Index may soon retest the key psychological resistance zone of 1,840-1,850 points.

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.