Vietnam Stocks End May Down Amidst Low Liquidity

The Vietnamese stock market ended the final trading week of May with a decline, as the benchmark VN-Index extended its losing streak to four sessions. Liquidity diminished to its lowest level of the year, coinciding with continued aggressive net selling by foreign investors. The VN-Index closed the week down 0.73 percent. Average daily trading value on the Ho Chi Minh Stock Exchange decreased by 24.5 percent, with matched trading volume also falling significantly below its 20-week average. Foreign investors offloaded a net VNĐ4.92 trillion worth of shares over the week, marking their twelfth consecutive session of net selling. Despite these challenges, market analysts suggest the current environment is characterized by stock-specific divergence rather than broad market weakness. They point to medium- to long-term factors like credit expansion, accelerated public investment, institutional reforms, and the potential for a market status upgrade as supportive of a future growth cycle. Experts believe future market performance will increasingly depend on actual earnings growth and business fundamentals, with forward P/E ratios around 12.3 times. The next upward phase is anticipated to be a continuation of policy-driven momentum from 2025, supported by credit growth and investment.

Analysts advise a cautious near-term approach, prioritizing existing portfolios and selective sector engagement until market conditions stabilize. The persistent low liquidity and absence of strong cash flows indicate the market is still seeking new catalysts. While corporate profits are reportedly growing, valuations are no longer the primary driver of stock performance. A potential market upgrade could attract significant foreign capital, estimated at $1.5-1.6 billion from ETFs alone. This cautious yet optimistic outlook suggests that while current trading activity is subdued, underlying economic factors and reforms are paving the way for potential future market recovery.