VN-Index Rally Lacks Broad Support as Investors Await Economic Cues

Vietnam’s benchmark VN-Index is exhibiting a pattern of superficial strength, or 'green on the outside, red in the core', as it trades within a 1,850–1,890 point range propped up by a handful of pillar stocks while underlying market health remains weak.

The market last week concluded its most positive week since the Middle East conflict erupted. On the Ho Chi Minh Stock Exchange (HoSE), the VN-Index advanced 47.38 points from the prior week to close at 1,871.91 points, securing its second consecutive week of gains following a period of sharp correction. During the week, the index approached the psychological 1,900-point threshold before profit-taking pressure drove it back towards the 1,850 level, from which it subsequently recovered. The large-cap VN30 basket was the primary driver, climbing 2.29 per cent to surpass the 2,000-point mark.

According to Vietnam Construction Securities, cooling global oil prices, which have retreated from the US$100 per barrel level, helped ease concerns over global inflation and supported the domestic market's rebound. Despite the index's positive close, performance was highly divergent across sectors. The rally was heavily dependent on a small group of large-cap stocks, particularly those within the Vingroup ecosystem.

A key concern is persistently low liquidity. The average trading value last week was approximately 32 per cent below its 20-week average, indicating that significant capital has not yet returned to the market. On June 26, for instance, HoSE saw trading volume of about 533 million shares, valued at over VNĐ16.1 trillion. The total trading value across all three of Vietnam's exchanges was around VNĐ17 trillion, well below levels seen in more active periods.

Foreign investors remained net sellers, though the selling pressure eased considerably. The net sell value for the week was approximately VNĐ213 billion, a decrease of more than 92 per cent compared to the previous week. Nguyễn Tấn Phong, an analysis expert at Pinetree Securities, attributed this trend to the sustained strength of the US dollar, which has been bolstered by cautious signals from the US Federal Reserve regarding its interest-rate path for the remainder of the year. The USD/VNĐ exchange rate stood at around 26,454, an increase of about VNĐ97 per dollar since the end of the first quarter, which can dampen capital flows into emerging markets.

The market is entering a sensitive period as investors await key economic data. Globally, attention will be on negotiations between the US and Iran, shipping activity in the Hormuz Strait, US jobs data for June, manufacturing PMI figures, and the ECB Central Banking Forum in Sintra. Domestically, market participants will be watching for updates on GDP, PMI, CPI, and the broader second-quarter production and trade landscape.

Phong of Pinetree Securities said the most probable scenario is a continuation of the 'green on the outside, red in the core' pattern, with the VN-Index oscillating between 1,850 and 1,890 points. He expects a few pillar stocks to maintain the index's stability while the broader market lacks clear direction. Pinetree Securities also noted that liquidity remains below average, interpreting it as a sign that large money has not fully joined the market. Against this backdrop, domestic capital is expected to favour a buy-and-accumulate strategy during market pullbacks rather than chasing rallies.

Bùi Văn Huy, deputy director of FIDT Asset Consulting & Management Company, commented that while the market is not in a clearly negative state, it requires more time for accumulation. He stressed that the most critical signal is not the index level but an improvement in liquidity. "If liquidity has not returned, the sideways trend in the 1,850–1,900 zone is likely to continue dominating the market," Huy said.

For the short term, investors are advised to maintain an appropriate allocation to stocks, avoid chasing prices during strong rallies, and focus on companies with strong fundamentals and clear growth stories. Recommended sectors include banks, securities, retail, public investment, and those poised to benefit from potential market-upgrading trends. As the VN-Index nears the 1,900-point mark, a more sustainable upward trend will require broader participation across sectors and a significant return of large capital flows.