VN-Index expected to consolidate in narrow range in May amid trade negotiation wait

The launch of the new KRX trading system on May 5 is expected to bolster sentiment in the short term, analysts stress that macroeconomic factors, particularly US tariff policies, will be the main drivers of market direction in the coming month.

Việt Nam’s stock market is forecast to move within a narrow range of 1,220–1,250 points in May 2025, as investors adopt a cautious stance, waiting for clearer developments in ongoing trade negotiations between Việt Nam and the US and the US and China.

While the launch of the new KRX trading system on May 5 is expected to bolster sentiment in the short term, analysts stress that macro-economic factors, particularly US tariff policies, will be the main drivers of market direction in the coming month.

According to experts at Saigon–Hanoi Securities (SHS), the mild recovery seen in late April suggests supply pressure is easing. However, the VN-Index remains in a consolidation phase, heavily influenced by investor sentiment.

The long-standing adage 'sell in May and go away' could also dampen market liquidity at the beginning of the month. Given ongoing uncertainties surrounding global trade tensions, investors are advised to maintain balanced portfolios and prioritise stocks with strong fundamentals and limited exposure to external trade risks.

Echoing this view, Nguyễn Việt Đức, head of Digital Business at VPBank Securities Joint Stock Company (VPBankS), noted that while the KRX system is expected to enhance market infrastructure and pave the way for new products such as T+0 trading, intraday transactions, short selling and options contracts, its immediate impact on the VN-Index may be limited.

He added that the system’s long-term benefits lie in helping Việt Nam advance towards an emerging market status, but any boost to investor sentiment would take time to materialise. In the near term, positive signals from trade talks may enable the index to break above 1,250 points; if not, a correction towards the 1,200-point support level remains plausible.

On a more positive note, first-quarter earnings results are providing a much-needed support base for the market. According to Construction Securities Incorporation (CSI), over 600 listed firms, accounting for around 41 per cent of total market capitalisation, have released their financial statements, with after-tax profits rising by 17.2 per cent year-on-year. The banking sector posted a 16.1 per cent increase in net profits, while non-financial sectors grew 23.5 per cent. The brokerage sector saw a modest 2 per cent decline.

Meanwhile, capital inflows are showing signs of recovery. Following a sharp sell-off in early April due to concerns over US retaliatory tariffs, the market has seen several rebound sessions. Despite the VN-Index ending April with a total loss of over 80 points (equivalent to 6.2 per cent), market liquidity is gradually improving and foreign net selling has eased.

Data from several securities firms point to positive prospects in sectors such as securities, banking, infrastructure construction, real estate and logistics, industries that stand to benefit from public investment packages and infrastructure reform. Both Agriseco and VinaCapital have recommended closely monitoring these sectors as the market positions itself for the next growth cycle.

VinaCapital has also highlighted the potential of government-led administrative reforms, efforts to improve the investment climate, and the growing prominence of emerging technologies, particularly artificial intelligence (AI), which is being strongly promoted by the Vietnamese Government. In this context, companies with solid fundamentals, stable operations, and strong access to domestic capital are expected to attract investor attention.

May will be a critical month for the VN-Index as the market navigates a lull in market-moving news. Optimism around first-quarter earnings is currently counterbalanced by concerns over global trade tensions. With the index projected to fluctuate between 1,220–1,250 points, analysts suggest that a significant breakout will require stronger catalysts.

Until clearer signals emerge, investors are advised to maintain a balanced portfolio and remain patient with a medium- to long-term investment strategy.