The Vietnamese stock market last week, with its weak recovery and increasingly weak liquidity, caused concerns about a downward trend that has no end in sight. Last week, there was even a trading session where the market recorded a record of bad liquidity when on the HOSE floor, there was only more than 7,500 billion VND in liquidity (session on January 9).
At this point, investors are starting to have to comply with the rule of identifying possible risks with the positive scenario that was given earlier when there were many forecasts that the VN-Index would increase beyond 1,400 points to 1,420 points in 2025.
Dr. Nguyen Duy Phuong - Director of DGCapital Investment Fund - said that, from a technical perspective, the 1,200 point mark is the final stop of the current correction phase, although at the 1,230 mark, the possibility of a rebound of the VN-Index is completely possible before the Lunar New Year. A session of increasing points again with large liquidity will confirm the possibility of the market's recovery.
Analysts at Mirae Asset Securities Vietnam also assessed that the stock market is in a suitable phase to accumulate investments at attractive valuations. Market cycle analysis suggests that the stock market's bull cycle will continue and large cash flows will soon flow into the market.
Regarding the upgrade story, SSI Securities Corporation's Investment Analysis and Consulting Center also expects the base scenario that FTSE is likely to announce the upgrade of Vietnam's market in the September 2025 review period and the actual implementation may take place from March 2026. Based on Vietnam's net market capitalization of USD 43 billion from FTSE Russell, the total net capital inflow may reach a high of USD 1.6 billion after FTSE Russell upgrades in the restructuring period and this does not take into account cash flows from active funds.
However, there are still opinions that go against the majority with caution about the stock market and warning of the risk of "disillusionment" with foreign capital even though the market is upgraded. In the recently published December 2024 report, SGI Capital analysts expressed the view that the market always agrees on the attractiveness of Vietnamese stocks, as well as the possibility of early promotion to emerging market status that will attract foreign capital, but in reality the opposite is happening.
Vietnam is a market that has been strongly sold in 4/5 recent years, with the largest selling rate in the region when calculated based on capitalization or total value that foreign investors are holding.
According to SGI Capital, the valuation of Vietnam’s stock market is not more attractive than other markets, although the majority of capitalization belongs to groups with high cyclical risks such as banking, finance and real estate. Therefore, the expectation of foreign capital returning to net buying in 2025 will be difficult to achieve if valuations are not cheap enough and exchange rate risks still exist.
SGI Capital expressed the view that the Vietnamese stock market will enter 2025 less favorably than last year, because the two important driving forces, cash flow and internal growth of enterprises, have shown significant weakening. In the context of less favorable cash flow, at a general valuation level that is not cheap, the price movement of each stock will depend largely on the internal strength of the enterprise and the financial capacity of shareholders. Divergence can be very harsh in the weak cash flow environment of 2025.
SGI Capital believes that prioritizing capital preservation, always being proactive and preparing well for purchasing power during this period will bring advantages when the market brings opportunities from the big and unexpected fluctuations of this year.
