Vietnam’s stock market recorded a strong breakthrough in the week of May 5–10, with the VN-Index climbing 3.3% to close at 1,267.3 points. The surge was driven by optimism surrounding the launch of the KRX trading system, the beginning of Vietnam-US tariff negotiations, and a rally in Vingroup stocks.

May 5–10: A bullish week driven by positive catalysts

During the trading week of May 5–10, the VN-Index posted a notable gain of 41 points, or 3.3%, closing at 1,267.3 points. The index rose over the first four sessions before retreating slightly in the final session due to profit-taking near the resistance zone of 1,270–1,280 points.

The Ho Chi Minh City Stock Exchange (HoSE), with a market capitalization of around $200 billion, saw investor sentiment boosted by a string of positive domestic and international developments.

A major driver was the official launch of the KRX trading system on May 5. The event not only restored investor confidence domestically but also impressed international institutions, especially as Vietnam strives to achieve an FTSE market upgrade to "emerging market" status by September 2025. The positive sentiment from the KRX rollout led to a notable increase in market liquidity.

Internationally, investor mood was lifted by the announcement that Vietnam had officially entered reciprocal tariff negotiations with the US starting May 7. This came shortly after the US reached a trade agreement with the UK, set a base tariff of 10%, and prepared for discussions with China in Geneva on May 10–11.

Remarks by US President Donald Trump regarding the potential reduction of tariffs on China by up to 80%, along with hints at “many great deals,” added to the upbeat sentiment.

For Vietnam, expectations that reciprocal tariffs would remain under 20% are seen as crucial to preserving the competitiveness of exports - particularly in sectors like textiles, seafood, and electronics. These developments helped ease concerns over a trade war, supporting the VN-Index’s momentum.

The Vingroup stock cluster - including Vingroup (VIC), Vinhomes (VHM), and Vincom Retail (VRE) - also became a focal point of investor attention, driven by news that Vinpearl is set to list 1.8 billion shares on HoSE on May 13.

This move is expected to boost market liquidity and further elevate Vingroup’s market position. Vingroup-related stocks gained an average of 5–7% during the week, contributing significantly to the index’s rise. Moreover, Vingroup's Q1 2025 earnings report revealed a 134.4% year-on-year increase in net profit, driven mainly by strong rebounds in real estate and tourism segments.

The broader Q1 2025 earnings season also provided critical support. According to VnDirect Research, net profit across HoSE-listed firms rose 22.6% year-on-year, led by the electricity and real estate sectors, which grew 223.9% and 134.4%, respectively. The recovery of domestic demand and an improving business environment laid a solid foundation for these gains.

However, the oil and gas sector posted a 64.8% drop in earnings, reflecting the stark contrast between industry performances, as average oil prices declined by 9%.

Forecast for May 12–16 and 2025 outlook

Following the strong rally, the market is expected to face profit-taking pressure in the week of May 12–16, especially as the VN-Index approaches the significant resistance range of 1,270–1,280 points.

According to Dinh Quang Hinh, Head of Market Strategy at VnDirect, much of the optimism surrounding the KRX system and US tariff talks has already been priced in. Without additional support - such as tangible progress in Vietnam-US negotiations or an interest rate cut by the State Bank of Vietnam - the index may struggle to break through the 1,280-point level in the short term.

In a positive scenario, if trade negotiations yield favorable outcomes (e.g., reciprocal tariffs below 20%), the VN-Index could test the 1,300-point mark.

Conversely, if the market undergoes a correction, the 1,200–1,220 point range could offer an opportunity for investors to accumulate promising stocks. These may include industrial real estate, seafood, and electricity stocks, which have not yet experienced significant gains in the current rally.

SSI Research emphasized that capital flows may rotate among different sectors. Short-term investors are advised to keep equity allocations at 50–60% and avoid leveraging to minimize risks.

Looking further ahead, Vietnam’s stock market outlook for 2025 remains optimistic, though it hinges on several key factors. VnDirect forecasts the VN-Index to range between 1,230 and 1,520 points by year-end.

In an optimistic scenario, the index could reach 1,520 points if Vietnam secures a favorable trade agreement with the US, the US Federal Reserve makes 3–4 rate cuts, and the State Bank of Vietnam adopts a looser monetary policy. An FTSE market upgrade to emerging status in September 2025 would also attract strong foreign capital inflows.

In the base-case scenario, with reciprocal tariffs under 20%, two Fed rate cuts, and continued domestic economic recovery, the VN-Index is projected to reach 1,350 points. A negative scenario would see the index fall to 1,230 points if trade talks fail, tariffs rise significantly, and foreign capital exits the market.

In terms of valuation, the VN-Index is currently trading at a projected P/E ratio of 10.5–11x and a P/B ratio of 1.6x, offering a substantial discount compared to the five-year average. Listed companies’ EPS growth is expected to reach 12–17%, providing ample room for further market expansion. SSI Research believes that attractive valuations and solid fundamentals will continue to support the market during periods of volatility.

Manh Ha