VN-Index Snaps Losing Streak but Analysts Warn of Fragile Recovery

Vietnam’s stock market recorded its first weekly advance following four consecutive weeks of declines, driven primarily by gains in large-cap stocks. However, the recovery's foundation appears tenuous amid subdued trading volumes and a lack of broad market participation.

On the Ho Chi Minh Stock Exchange (HoSE), the benchmark VN-Index concluded the previous week at 1,824.53 points, marking a 1.84 per cent increase and halting a four-week correction. Analysts at Saigon-Hanoi Securities (SHS) noted that the market successfully tested the 1,780-point support level, a peak from 2025, before rebounding to reclaim the significant 1,800-point psychological threshold. Sentiment was also bolstered by positive developments in Middle East peace talks, which helped ease oil prices and foster a more stable interest rate environment.

Despite the index's positive performance, market liquidity remained a concern. While trading value rose 16.4 per cent from the prior week, it was still 22.4 per cent below the 20-week average, indicating that significant capital has not yet returned to the market. Foreign investors also continued their selling streak, offloading a net 122 million shares valued at approximately VNĐ2.86 trillion (US$109 million). Although this net sell value was slightly lower than the previous week, the market remains under pressure from sustained foreign capital outflows.

Looking ahead, securities firms are maintaining a cautious outlook, even as immediate downward pressure appears to have subsided. Vietnam Construction Securities (CSI) described the recovery as encouraging but insufficient to confirm the beginning of a sustainable uptrend. "Investors should remain patient and wait for stronger cash flow with broader participation across sectors, accompanied by clearer improvements in liquidity before considering a more aggressive buying strategy," CSI analysts advised.

Pinetree Securities analyst Nguyễn Tấn Phong echoed this sentiment, forecasting that the "green outside, red inside" phenomenon—where the index rises on the strength of a few blue-chips while most stocks decline—would likely persist. Phong stated that cash flow is concentrated in a small number of large-cap stocks with specific growth narratives, leaving the majority of shares to contend with below-average liquidity and defensive investor sentiment.

External factors are expected to heavily influence market direction. Geopolitical developments in the Middle East, particularly shipping activities through the Strait of Hormuz, are being closely watched. Any disruption could impact oil prices, inflation, and global monetary policy, with potential negative spillovers into Vietnamese equities.

Furthermore, hawkish signals from the US Federal Reserve have bolstered the US dollar, increasing pressure on the USD/VNĐ exchange rate and contributing to the ongoing foreign selling. According to Pinetree, a stronger dollar could also constrain the State Bank of Vietnam's ability to pursue accommodative monetary policies, posing challenges to the nation's economic growth targets. Regionally, market participants are monitoring the People's Bank of China's decision to hold interest rates steady, as well as forthcoming industrial profit and manufacturing data from the world's second-largest economy.

With liquidity below historical norms and foreign investors remaining net sellers, market observers contend that the durability of the current rebound requires stronger confirmation from broader cash flow and improved trading activity in the coming weeks.