Will VN-Index return to the 2025 peak?

The VN-Index opened higher on Monday and traded in positive territory throughout the session, closing up 1.4% at 1,332.5. The Vietnam stock market's liquidity increased, with total trading value rising 42.9% compared to Friday to VND21.3tn (USD821.3mn). The HNX Index followed a similar pattern, gaining 1.4% to close at 219.4.

Most sectors gained yesterday, led by Personal & Household Goods (4.5%), Chemicals (4.3%) and Real Estate (3.1%). Basic Resources (-0.1%) declined.

Top performers yesterday included VHM (6.8%), GVR (6.8%), VIC (1.6%) and BCM (4.9%). VHM (6.8%) led the gains, adding 4.5 points to the index. Top laggards included VPL (-0.3%) and STB (-0.6%).

Lian SGP Holding Pte. Ltd. said it will acquire all shares of IMP (5.2%) from existing shareholders, including a 47.69% stake from SK Investment Vina III Pte. Ltd, a 9.75% stake from Sunrise Kim Investment JSC, and a 7.37% stake from KBA Investment JSC. The transaction is expected to be completed within nine months of signing, after which Imexpharm will become an indirect subsidiary of Livzon and its financial results will be consolidated into the Chinese group’s financial statements. With financial and technological backing from Livzon, Imexpharm will gain additional resources to accelerate investment projects, expand research and development, and diversify its product portfolio.

While TCM (6.9%) and MSH (6.9%) hit their ceiling prices yesterday following remarks by US President Donald Trump. “We’re not looking to make sneakers and T-shirts. We want to make military equipment. We want to make big things. We want to do the AI thing,” Trump said. “I’m not looking to make T-shirts, to be honest. I’m not looking to make socks. We can do that very well in other locations. We are looking to do chips and computers and lots of other things, and tanks and ships.”

Foreign investors net sold today with VND59.5bn (USD2.3mn), with selling momentum focused on VIX (VND92.9bn, USD3.6mn), VCG (VND69.4bn, USD2.7mn) and GEX (VND56.7bn, USD2.2mn). Meanwhile, foreign investors mainly bought VHM (VND150.6bn, USD5.8mn), VSC (VND51.3bn, USD2.0mn) and DIG (VND38.9bn, USD1.5mn).

Beyond the re-emerging tariff risks from President Donald Trump, many investors are particularly interested in Morgan Stanley's latest mid-year outlook, which offers key insights into the US economic trajectory. Morgan Stanley anticipates US inflation to peak in 3Q25, settling between 3% and 3.5% by year-end, while the unemployment rate is projected to gradually climb to 4.8% by late 2026. This backdrop of modest GDP growth, forecast at a tepid 1% for both 2025 and 2026, suggests the Fed will delay rate cuts this year. However, Morgan Stanley believes that a combination of weaker growth and persistent tariff impacts will eventually compel the Fed to act more aggressively in 2026, potentially bringing the Fed Funds Rate down to 2.5 - 2.75% from its current 4.25-4.5%.

On the fiscal front, Morgan Stanley projects the US deficit will expand to 7.1% of GDP in 2025 from 6.3%, exacerbated by the House's recent passage of Trump's sweeping tax cut plan, now awaiting Senate consideration. In essence, Morgan Stanley's outlook conveys two critical messages: first, a scenario of slower US growth and sticky inflation without necessarily leading to a recession remains their base case. Second, given this economic environment, there's no incentive for the Fed to initiate rate cuts this year, reserving more aggressive easing for 2026, indicating a decidedly hawkish stance on near-term rate cut probabilities. If the Fed continues to cut rates, the State Bank of Vietnam will have more room in running its monetary policy.

No official information on tariff negotiations has been announced, but stocks of many sectors have increased very strongly, such as Industrial Park Real Estate (5.17%), Seafood (6.02%), Textiles (9.25%)... and spread to many other industries...

“Technically, yesterday was a very positive session with high liquidity, providing good support for the Vietnam stock market’s uptrend. Furthermore, the strong correction in yesterday's session did not break the previous gap of 1,285 points”, said CSI.

CSI expects the positive signal to return and soon push the VN-Index above the 2025 peak of 1,343 points, towards 1,398 points. Therefore, it prioritizes returning to the buy position.