Has the Vietnamese stock market found a short-term bottom?

Following a sharp sell-off in early March, Vietnam’s stock market is showing signs of stabilization, supported by domestic institutional buying and a return of foreign inflows. However, according to Tran Hoang Son, Market Strategy Director at VPBank Securities, current developments are still insufficient to confirm that the market has formed a short-term bottom, with the recent rebound largely technical in nature.

Sentiment outweighs fundamentals

The steep decline of the VN-Index on March 9—when the benchmark lost more than 115 points—was primarily driven by a spike in oil prices to nearly $120 per barrel amid escalating tensions in the Middle East. However, the correlation between oil prices and equity markets at present is largely short-term and sentiment-driven, rather than rooted in fundamentals.

This pattern has not been limited to Vietnam, as regional markets also experienced widespread sell-offs triggered by panic before investors had time to assess the actual economic impact. The subsequent sharp decline in oil prices—following plans by the G7 to release strategic reserves and expectations of a de-escalation in geopolitical tensions—helped restore market confidence and fuel a rebound.

Rebound yet to confirm a trend reversal

Despite the recent recovery, Son cautions that this remains a technical rebound, as key medium-term indicators have yet to improve. The VN-Index is still trading below its major moving averages, including the 20-day, 50-day, and 100-day lines, suggesting that a sustained uptrend has not yet been re-established.

In a more optimistic scenario, the market could continue its recovery toward the 1,750-point level (100-day moving average), and potentially 1,780 if liquidity remains stable and no new negative catalysts emerge. However, a genuine stabilization would require a combination of factors: sustained daily trading value above VND 30–35 trillion, positive market breadth, and consistent net buying by foreign investors.

In the near term, volatility is expected to remain elevated, with significant fluctuations likely over the next one to two weeks.

Capital flows into commodity-linked sectors

Although oil prices have retreated from recent highs, they remain elevated—up around 45% year-to-date in 2026—posing inflationary pressures globally in the first half of the year. In this context, capital is rotating into sectors that benefit directly from commodity price dynamics.

Oil and gas stocks continue to gain support from higher crude prices, which improve upstream profitability and stimulate demand for EPC services, drilling activities, and offshore rig leasing. Companies across this value chain are expected to see improved earnings in the medium term.

In the fertilizer sector, concerns over supply disruptions from the Middle East—a region accounting for a significant share of global urea trade—have driven stockpiling and pushed urea and DAP prices higher. However, gains are unlikely to match the surge seen in 2021–2022 due to relatively lower input and agricultural commodity prices.

Meanwhile, shipping companies are benefiting from trade disruptions, with tanker freight rates surging multiple times and container shipping supported by slower vessel turnaround and increased feeder demand.

Risks remain: leverage, capital flows, and geopolitics

Despite the rebound, downside risks persist, particularly from margin unwinding, as outstanding margin debt across the market remains elevated—estimated at over VND 400 trillion.

Foreign capital flows also pose a key uncertainty. While foreign investors have recently turned net buyers following the decline in oil prices, this trend may reverse if the U.S. Federal Reserve maintains high interest rates or if U.S.–China trade tensions escalate, potentially putting pressure on both the exchange rate and equity markets.

Geopolitical developments in the Middle East and potential disruptions to global energy supply chains remain critical variables, with direct implications for inflation and global growth prospects.

Strategy: stay defensive and wait for confirmation

In the current environment, Son advises investors to prioritize risk management, reduce margin exposure to below 30–40%, and maintain a higher allocation to cash. Large-cap stocks with strong fundamentals are preferred.

While short-term volatility remains high, Vietnam’s macroeconomic fundamentals are still solid, supported by resilient growth and a recovery in exports. This provides a constructive long-term outlook, but in the near term, patience is key—investors should avoid chasing rallies and wait for clearer confirmation of a sustained trend.