Where will the smart cash flow go?

Is it wise to wait for a low price before making a move, or is now the ideal moment for astute investors to enter the stock market?

When the "tractors" reduce force

Numerous causes have contributed to the Vietnam stock market's recent expansion, although the key drivers are focused in a small number of stock market sectors with rapid growth rates that are significantly higher than those of the VN-Index and the other sectors. As a result, the cash flow has concentrated on the large caps and produced such excellent performance that Mr. Bui Van Huy, Vice Chairman of the FIDT Board of Directors, said that the divergence is so profound that it has produced two parallel universes on the electronic board.

According to FIDT data, Vingroup's stocks increased the VN-Index by 251.7 points between the start of the year and early October. The index received 147.8 points from about 19 banking stocks on HoSE. GEX and GEE, two of Gelex's equities, climbed 24.2 points. The VN-Index fell 27 points as a result of the remaining stocks that were not part of the aforementioned three groups.

However, resources cannot be permanently focused on a small number of stocks. The market support waned as the equities of Vingroup, Gelex, the real estate sector, etc., faced selling pressure. The market's recovery was in a tug-of-war position as the trading value was still reported at a level below the 20-session average.

The VN-Index dropped below 1,600 points at the conclusion of the trading session on November 7. The HNX-Index was at 260 points. While international investors fluctuated between a series of net selling sessions and net buying activities during specific trading sessions, domestic capital flow continued to dominate the market.

However, experts feel that the market's P/E is still inexpensive at roughly 12x when excluding this group of firms, given that the rise of the stock market has been concentrated in about 13 major stocks in recent months. With the exception of high-performing companies like real estate and securities, data from a major investment fund in the market indicates that many industries have low P/E valuations when compared to the average over the previous five years.

Investment strategy

Industry, energy, insurance, utilities, information technology, and vital consumer products are among the sectors with low P/E. In the meanwhile, the P/E values of the banking and healthcare sectors are comparable to the industry average during the previous five years. When banking is one of the sectors with a somewhat concentrated growth in select private banking stocks, this also represents market reality. For instance, FPT has dropped significantly in recent years—roughly 35%—bringing the information technology industry's P/E to an appealing level.

In a market that is accumulating and highly differentiated, experts say that investors may preserve their present stock portfolio, with a weight of 50%, while simultaneously seeking short-term returns because many firms and many industries have low values.

According to SHS Research experts, investors can take into consideration selective investment opportunities based on the reasonable valuation range of the enterprise and good growth in business results in the third quarter of 2025, as opposed to the period when the VN-Index only increases depending on a few groups of stocks and expands more in stock market sectors. Investing in firms with strong fundamentals, leadership in key areas, and exceptional economic development is the goal.

In the same way, VDSC advises holding equities while diversifying the portfolio, keeping a respectable purchasing power ratio, and concentrating on companies with solid fundamentals. Cash flow will continue to flow to stocks with appealing values and promising business prospects in the setting of a market that is anticipated to meander sideways with a minor upswing.

Mr. Bui Van Huy thinks that the Vietnam stock market still has promising long-term prospects since it has robust and long-lasting development drivers. He thus thinks that companies with intrinsic value and sustainable development will always be the target of investors due to the "awakening" smart cash flow.