Market begins July with optimism, strong foreign investment

Last week, the key focus was on the substantial net buying activity from foreign investors, which reached over VNĐ5.1 trillion, the highest level recorded in two years.

The Vietnamese stock market began the first week of July with a vibrant upward trend, buoyed by significant improvements in liquidity and a pronounced surge in foreign investment.

On the Ho Chi Minh Stock Exchange, the VN-Index closed the week at 1,386.97 points, while the HNX-Index on the Hanoi Stock Exchange (HNX) was last traded at 232.51 points.

For the week, the former rose over 1.1 per cent, which was its third consecutive weekly gain, and the latter increased 2 per cent.

According to Vietnam Construction Securities Corporation (CSI), average liquidity on the HoSE reached 948 million shares, reflecting a 13.84 per cent increase compared to the previous week, with total trading value hitting VNĐ23.32 trillion (US$890.8 million), the highest in a month and up 6.4 per cent from the average of the past 20 weeks.

Last week, the key focus was on the substantial net buying activity from foreign investors, which reached over VNĐ5.1 trillion, the highest level recorded in two years.

Notable stocks that attracted heavy foreign investment included SSI Securities Corporation, Mobile World Investment Corporation and FPT Corporation, indicating a clear preference for companies with solid fundamentals and long-term growth potential.

Coupled with positive news regarding the Việt Nam - US trade agreement, this influx of foreign capital greatly bolstered investor sentiment, propelling the VN-Index closer to the resistance level of 1,400 points.

The Saigon-Hanoi Securities Company (SHS) highlighted two key takeaways from the opening week of July: the announcement of the trade agreement and the extraordinary trading session on July 3, which saw liquidity exceed VNĐ30 trillion on HOSE.

The preliminary trade agreement with the US had alleviated concerns regarding tariff risks, providing a more stable environment for Vietnamese export businesses.

SHS views this as an opportunity for investors to restructure their portfolios, focusing on sectors less affected by international fluctuations and those poised for growth, particularly in domestic consumption.

Throughout the week, CSI observed positive trends in 16 of the 21 industry sectors, with notable gains in shipping (up 4.6 per cent), securities (up 3.94 per cent) and technology-telecommunications (up 3.01 per cent).

Conversely, sectors such as consumer food (down 1.59 per cent), textiles (down 1.54 per cent) and real estate (down 1.23 per cent) experienced significant corrections, particularly stocks linked to export activities like seafood, industrial zones and textiles, which fell sharply following updates on tax policies.

Experts at SHS noted a shift in short-term capital away from trade-sensitive stocks, favouring defensive sectors or those yet to see substantial recovery.

However, securities firms warned of potential short-term correction risks as indices approach strong resistance levels.

CSI cautioned that the VN-Index was nearing the range of 1,398 - 1,418 points, where profit-taking pressure might emerge following a three-month rally.

Technical analysis also indicates that both the VN-Index and VN30-Index are in a short-term overbought state, nearing historical peaks established in 2021-2022.

Đinh Quang Hinh, head of Macroeconomics and Market Strategy at VNDirect Securities Corporation, said that the trade agreement with the US represented a significant milestone that would help Việt Nam maintain its export competitiveness and bolster foreign investor confidence.

However, he added that the market's focus would soon shift toward the second quarter earnings results of listed companies.

VNDirect has forecast bright prospects for corporate profits, recommending that investors take advantage of market fluctuations to restructure their portfolios.

The securities firm suggested prioritising sectors with promising profit forecasts, such as banking, securities, consumer goods and retail, while advising against chasing prices at elevated levels and gradually realising profits as the VN-Index approaches the 1,400-point resistance level.

Domestically, macroeconomic prospects would continue to solidify investor optimism, while globally, financial markets would face pressure from trade tensions and new US tariff policies.