Opportunities and challenges in a transitional phase

The Vietnamese stock market is currently in a transitional phase, presenting both opportunities and challenges. Notably, attention should be given to the sectoral divergence and the cautious stance of foreign investors.

Việt Nam’s stock market is navigating a complex period, influenced by internal and external factors.

The third-quarter earnings reports, pressures from international markets, and foreign capital flows have created a challenging environment, but there are opportunities to be seized.

VN-Index’s strong support level at 1,250 points

Trading statistics from the Hồ Chí Minh Stock Exchange (HoSE) show that the VN-Index saw three gaining sessions and two losing ones last week. By the end of the week, the VN-Index rose slightly by 0.17 per cent to 1,254.89 points.

The HNX-Index on the Hà Nội Stock Exchange similarly experienced two losing sessions and three gaining sessions, closing at 225.41 points, up 0.16 per cent.

Phan Tấn Nhật, Head of Analysis at Saigon – Hanoi Securities (SHS), noted that the VN-Index is maintaining a strong support level around 1,250 points.

Additionally, market breadth on HoSE indicates a tilt towards recovery, with some sectors performing better than others. Nhật also pointed out that liquidity dropped sharply, by about 20 per cent on HoSE.

Foreign investors record largest net sale of the year

Foreign investors posted their largest weekly net sale since the start of the year, with transactions worth VNĐ7.652 trillion (approximately US$313.7 million) on HoSE, reflecting a cautious outlook.

The week’s selling focused on large-cap stocks, including VIB (VNĐ5.4 trillion), MSN (VNĐ1.953 trillion) and VHM (VNĐ528 billion).

Đinh Quang Hinh, Head of Macro and Market Strategy at VNDIRECT Securities, noted that the market is experiencing fluctuations due to ETF Diamond restructuring and foreign investor sell-offs in several large-cap stocks.

However, Hinh observed that there are positive signs, with third-quarter earnings of listed companies showing revenue growth of 8.7 per cent and post-tax profit growth of 18.7 per cent year-on-year.

Hinh anticipates exchange rate pressures will ease in the latter part of Q4 as the US Federal Reserve reduces interest rates and foreign currency supply increases, driven by FDI and remittances. The 1,240–1,250-point range is expected to provide strong support for the VN-Index.

Investment outlook and strategy

Nhật predicts that the VN-Index could face short-term adjustment pressures towards the 1,245–1,255-point range, with resistance at 1,270 points. In the medium term, if it remains above the 1,250-point support, the VN-Index may target 1,300 points.

He advises investors to maintain a balanced portfolio, prioritising stocks with solid fundamentals, strong third quarter earnings, and promising year-end growth prospects, particularly leading stocks in key sectors.

Hinh suggests that long-term investors could consider increasing their holdings if the index adjusts to the 1,240–1,250-point range, with a focus on banking, residential real estate, and export-oriented sectors (textiles, seafood, furniture) that are projected to perform well in the last two quarters of the year.

Overall, experts identify the 1,240–1,250-point range as a crucial support area for the VN-Index. Medium-term growth potential could bring the index to 1,300 points, though this will depend on various macroeconomic and microeconomic factors.