Five potential stock market sectors to watch for the next time

A Pause Before the Next Leg Higher

Tran Hoang Son, Head of Market Strategy at VPBank Securities (VPBankS), noted that the VN-Index has risen about 60% since its April low. Recent volatility, he argued, is largely a matter of short-term profit-taking, with foreign investors selling nearly VND 38 trillion over the past five weeks. This, however, has not reversed the market’s upward trajectory, only causing sideways movements of around 5%. Sector by sector, some stocks have corrected by 8–18%.

Technical indicators point to strong support in the 1,600–1,619 range and resistance near 1,700. MACD crossovers and Ichimoku signals suggest the market is consolidating on a firm base around 1,600, preparing for a new upward move. “This is an important period for investors to select sectors at attractive valuations, especially as FTSE Russell is set to announce its decision on Vietnam’s market reclassification in early October,” Son emphasized.

Macro Tailwinds and Liquidity

The longer-term case for equities rests on monetary policy and liquidity. Central banks globally are shifting toward easing, and in Vietnam, credit growth after eight months has reached its highest level in years. Expectations that the Federal Reserve will cut interest rates in September, with further reductions possibly later this year and into next, add to the momentum. Historically, equity markets tend to rally strongly during Fed easing cycles.

Liquidity has surged dramatically. From an average of VND 20–25 trillion per session earlier this year, daily trading has doubled to VND 40–45 trillion, with peaks of VND 55–60 trillion. This influx of capital reflects robust investor participation and provides the backbone for sustaining the uptrend. “We are only halfway through the current wave,” Son argued.

Investment Strategy in a Sideways Phase

Analysts recommend a cautious but active approach in the current sideways market. Investors may consider deploying 20–30% of their portfolios into fundamentally strong stocks showing solid technical bases. For medium-term positions, a 60–70% allocation should be maintained, leaving cash ready to add exposure if the VN-Index breaks decisively above 1,700, confirming the next upward trend.

The screening criteria are clear: earnings-per-share growth above 15–20% year-on-year, return on equity of at least 15%, debt-to-equity below one, and valuations at or under 15 times earnings—roughly in line with the market average. On the technical side, stocks should be trading above key moving averages, consolidating in narrow ranges, and showing signs of accumulation rather than steep corrections.

Sector Rotation and Opportunities

The broader market picture shows banks, securities, and property stocks in consolidation, while materials, energy, and consumer-related names are showing stronger momentum. Analysts see this as an opportunity for investors to detect where money is flowing, combining fundamental and technical analysis to identify favorable entry points.

Banks remain a focal point. Core banking stocks are moving sideways, but when they rebound, they could ignite the next market-wide rally. Indeed, recent sessions saw financial stocks cushioning the VN-Index against steeper declines, with foreign investors accumulating names such as ACB, CTG, and MBB, even as they sold others like VPB and SSI.

Brokerage firms come next in the pecking order. With market liquidity at record highs and margin usage climbing, securities companies have reported soaring profits. If Vietnam secures an upgrade in global indices, analysts expect brokerage shares to surge further.

Real estate, by contrast, is recovering strongly but remains volatile. Many developers still trade at high price-to-earnings ratios despite uncertain earnings visibility, suggesting that timing and technical signals will be critical in this sector.

Energy stocks, particularly in oil, gas, and electricity, are flashing bullish signals after consolidation. Companies like REE, PVS, and PVD are seen as beneficiaries of recent policy support, including Resolution 70, which has boosted sentiment across the sector.

Finally, steelmakers are gaining traction on the back of domestic demand, anti-dumping measures, and infrastructure spending. Hoa Phat Group (HPG) is highlighted as a key beneficiary, with its leading position in the industry and rising consumption trends.

The VN-Index is pausing at a high base, but the structural uptrend remains intact. Monetary easing, ample liquidity, and the potential reclassification upgrade provide the conditions for further gains. Rather than fearing short-term corrections, investors are encouraged to view this consolidation as an opportunity to position themselves in sectors with both solid fundamentals and technical strength, ready to ride the next wave when momentum returns.