Foreign inflows return as oil firms, banks lift Vietnam's stock benchmark: Is a new uptrend emerging?

The VN-Index closed the Tuesday session at 1,811.15 points, gaining nearly 23 points, with 17 of 18 sectors ending higher.

Oil and gas stocks led the advance, followed by utilities and industrial goods and services.

Foreign investors remained net buyers on the Ho Chi Minh Stock Exchange (HOSE), purchasing a net VND719 billion (US$27.6 million) worth of shares, according to Yuanta Securities Vietnam.

Buying focused mainly on banks and oil and gas stocks, including Vietcombank (VCB), Binh Son Refining and Petrochemical (BSR), BIDV (BID), Techcombank (TCB), and MB Bank (MBB).

Recovery still needs confirmation

Despite the strong rebound, analysts said it was still too early to conclude that the VN-Index had entered a new uptrend.

Tien Phong Securities said the index had moved back above its key moving averages, keeping the broader upward trend intact. However, trading liquidity remained too weak to offset the heavy selling seen in the previous two sessions.

HSC Securities also noted an improvement in cash flows and broader market participation, but said stronger turnover would be needed to confirm that the recovery is sustainable.

The next test could come as the VN-Index approaches key resistance levels. Yuanta Securities Vietnam expects the index to test 1,820-1,825 points in the coming sessions, while HSC sees a broader resistance zone at 1,820-1,850 points.

Volatility could also increase as the market heads into derivatives expiry week and investors await the U.S. Federal Reserve’s policy meeting.

If the market pulls back, the 1,780-point level is emerging as near-term support. TPS sees stronger support at 1,715-1,755 points in the event of a deeper correction.

Against that backdrop, analysts advised short-term investors to avoid chasing stocks that have already risen sharply or taking on excessive leverage.

Instead, market rebounds could be used to restructure portfolios, reduce margin exposure, and focus on stocks showing stronger relative performance and improving cash flows.

Index rebalancing draws attention

Ho Huu Tuan Hieu, head of investment strategy at SSI Research, said expectations surrounding a possible Fed rate hike in September had already been partly reflected in the market’s cautious trading and recent correction.

He said expectations began to shift after Vietnam’s September 2 holiday, following comments at the Jackson Hole conference and the release of new U.S. economic data.

Since then, market volatility has narrowed and many stocks have declined, meaning the Fed’s September rate decision may no longer come as a major surprise to investors.

Hieu said a more important market catalyst this week could be the first index rebalancing following Vietnam’s stock-market upgrade, which may bring in fresh capital and improve liquidity and buying demand.

Signs of stronger money flows may already have started to emerge in the September 14 session, he added.