Vietnam stocks: Where’s the next buy zone?

The trading session on Monday, September 8, opened with a sharp drop. The VN-Index closed down 42.44 points to 1,624.53. Liquidity on the HoSE exchange surpassed the August average, reaching over VND 53.17 trillion. A notable point was the strong net buying from foreign investors, totaling nearly VND 1 trillion. Key stocks in the VN30 basket saw major inflows, including HPG (VND 307 billion), SSI (VND 287 billion), CTG (VND 146 billion), SHB (VND 132 billion), VPB (VND 94 billion), and MBB (VND 92 billion).

Commenting on the recent developments, Mr. Trần Hoàng Sơn, Head of Market Strategy at VPBank Securities (VPBankS), noted that the market had witnessed a strong rally, with the VN-Index increasing by around 32% since the beginning of the year, and over 50% from its bottom. After such an extended rally, the index inevitably approached key resistance levels, notably reaching the 1,700-point zone last week.

“Typically, when the VN-Index hits new highs or critical resistance, momentum tends to stall or experience technical pullbacks before attempting a breakout,” Mr. Sơn said.

Another factor affecting the market is the holiday effect. While liquidity surged alongside the market rally, it notably slowed during the last week of August and early September due to a long holiday period. This slowdown suggests growing investor caution, particularly ahead of key developments in September such as possible Fed rate cuts, a potential credit rating upgrade, and new macroeconomic data. In addition, foreign investors have recently sold heavily, with a net outflow exceeding VND 29 trillion in August alone, and over VND 60 trillion since the beginning of the year.

Combined with external signals such as exchange rate volatility, these factors have contributed to cautious sentiment and a wait-and-see approach. Short-term profit-taking pressure is entirely normal in this context.

So far, the VN-Index has only corrected about 3% from its recent peak. According to Mr. Sơn, while this may signal a short-term pullback, it should not be a cause for panic, as this could merely be a technical correction within a longer uptrend. However, he cautions investors not to be complacent. “I believe investors need to closely monitor the index and liquidity, especially around key support levels like 1,630 and 1,600. If the VN-Index closes below those levels, it's wise to wait for deeper support zones before disbursing,” he advised.

From a technical standpoint, Mr. Sơn explained that transitioning from a minor pullback to a deep correction requires the index to break below key indicators such as the MA21 or the MA9-26 crossover. Important thresholds in this context are 1,620 and 1,600. If these are breached, a sharper drop may follow.

He emphasized that this is a sensitive phase, requiring caution. Based on recent sessions, it's still uncertain whether the market is entering a deeper correction. However, with indicators such as RSI divergence and MACD crossovers, the market may face a 5–10% adjustment, confirmed by a clear break below critical support levels.

Nonetheless, VPBankS maintains a positive long-term outlook on the market.

In response to how the market might evolve, Mr. Sơn leans toward a more cautious scenario. If the VN-Index breaks the 1,600–1,620 support zone, a “zig-zag” downward correction may unfold. In the broader view, if the current uptrend is considered a two-year cycle, we may only be halfway through.

In previous uptrends, after 25–30% gains, the market often saw pauses or 8–10% corrections. Hence, a similar phase now would be rational, especially after such a sharp rally.

The market needs to wait for new information to establish a balance zone. The nearest support area may lie between 1,550–1,600 points, with a second support zone around 1,500. This correction phase also presents an opportunity for latecomers to enter the market after missing earlier rallies.

Regarding disbursement strategies during corrections, Mr. Sơn advised that investors first analyze charts and monitor index movements. During a normal pullback, the index may decline 2–5% over several sessions and then see a technical rebound. In this phase, close observation is critical.

Investors should watch technical indicators such as RSI, MA, and MACD to identify potential support zones and optimal disbursement points. Corrections are part of any uptrend, and it’s essential to identify safe entry levels during such phases.

“It’s very difficult to time the exact market bottom, so investors may consider gradually disbursing 10–20% at near-term support levels. Once technical indicators show a trend reversal and market sentiment improves, they can increase their exposure,” Mr. Sơn concluded.