As the VN-Index experiences a short-term pullback following a strong rally, investors are questioning whether the market has peaked or is merely undergoing a technical correction. According to Mr. Tran Hoang Son, Chief Market Strategist at VPBank Securities (VPBankS), this correction presents a strategic opportunity to restructure portfolios and prepare for a new growth phase.
Speaking at the “Vietnam and Market Indices” forum on August 4, Mr. Son emphasized that a correction after six consecutive weeks of gains—during which many stocks surged by 25% to over 40%—is completely normal. The recent market adjustment coincided with the VN-Index approaching its previous peak levels from 2021–2022, suggesting this is a technical pullback rather than the start of a long-term decline.
He noted that the current market backdrop closely resembles the 2020–2022 liquidity-driven rally. As of early July, credit growth has reached 9.9%—the highest level in years since the COVID-19 period. Combined with supportive macro policies such as monetary easing and aggressive public investment, this has fueled a surge in capital inflow into equities, with daily trading volume occasionally hitting a record $3 billion.
Mr. Son likened the present situation to the post-pandemic bull market, where the VN-Index climbed 45–50% over three distinct waves. Historically, these rallies were interspersed with corrections ranging from 10% to 16%. With a nearly 46% gain in recent months, a 7–10% pullback is expected—and healthy. Following this phase, the VN-Index could resume its uptrend and potentially surpass 1,600 points, even targeting 1,800 in the medium term.
Two key investor strategies are suggested:
Partially take profits (around 15–20%) on stocks with significant gains.
Use the correction to accumulate stocks at attractive valuations, especially when the medium-term outlook remains positive.
If the VN-Index holds above the 1,480-point support zone, a trading range between 1,480 and 1,550 is likely. If it dips below this level, investors may find buying opportunities around the 1,430–1,450 zone.
Looking ahead, Vietnam’s potential upgrade to Emerging Market status by FTSE Russell in September 2025 could serve as a powerful catalyst for renewed foreign inflows.
According to Mr. Son, banking stocks are clear beneficiaries of the current credit growth cycle. Several banks have received expanded credit limits and are disbursing capital aggressively—driving strong earnings performance.
As of now, around 970 companies have reported Q2 earnings, showing an average profit increase of 33% year-over-year. This creates a strong earnings outlook for the rest of 2025. Notably, both financial and non-financial sectors are contributing to growth. While financials posted more modest gains of 18%, their large market cap and liquidity make them key players.
Earnings remain the core driver of stock prices. However, investors should differentiate between sustainable earnings-backed growth and speculative momentum—particularly in mid- and small-cap stocks, which may rise despite low absolute profit or overextended valuations.
Mr. Son advocates using the PEG (Price/Earnings to Growth) ratio to assess investment opportunities. A PEG ratio below 1 indicates that a stock is undervalued relative to its growth rate—making it a strong candidate for investment. In contrast, a PEG above 1 suggests the price may not be justified by fundamentals.
Mr. Son also cautioned against blindly chasing so-called “penny stocks” or low-priced speculative names. While such stocks can deliver multi-fold returns in bullish phases, they often lack fundamental backing. In a strong uptrend, investor greed can lead to ignoring risks.
He stressed that stock prices are merely the surface—what truly matters is the strength of underlying business performance. Real opportunities come from firms with solid financials, clear growth trajectories, and favorable policy tailwinds.
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