Vietnam stocks slide after record high as short-term risks emerge
The Vietnam Ho Chi Minh Stock Index (VN-Index) closed at 1,493.41, down 4.11 per cent, marking its largest single-day drop since the historic 6.68 per cent plunge on Apr 3, which followed US President Donald Trump's announcement of his so-called 'Liberation Day' tariffs that imposed a 46 per cent levy on Vietnamese goods.
Stocks of lenders such as SHB, MBBank dropped by more than 6.5 per cent, while real estate companies including Dat Xanh and Novaland, and brokers such as VNDirect and Vietcap closed at their floor prices, significantly dragging down the index.
'I believe the correction will continue over the next few trading sessions, given the growing presence of short-term risks,' said Nguyen The Minh, head of research and development at Yuanta Securities Vietnam, adding that the VN-Index could fall to as low as 1,380 level in the near term.
Minh specifically highlighted the VN-Index's price-to-earnings ratio, which has reached its 10-year average of 15 – a level that may prompt investors to reassess valuations in light of actual second-quarter earnings results.
'Pricing is quite high across the board although forward-looking, it is still not extremely demanding but certainly not... attractive anymore,' noted Tyler Nguyen, chief market strategist at Ho Chi Minh City Securities.
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Nguyen added that short-term profit-taking by large funds and high-net-worth individuals, the weakening of the Vietnamese dong amid higher-for-longer US interest rate environment, a margin lending cut by a major retail broker and proposed capital gains taxes on real estate and securities trading also contributed to the market's decline.
Analysts said that over the medium to long term, Vietnam remains well-positioned, supported by trade advantages, solid economic fundamentals backed by pro-growth policies, and a potential emerging-market upgrade by index provider FTSE this September.
Vietnam's equities have seen an upward momentum since early July, when a new trade agreement with the US was announced that imposes a softer 20 per cent tariff on imports from Vietnam.
The Vietnamese index has rallied by 17.9 per cent this year and rebounded by more than 36 per cent from the low on Apr 9, well ahead of Asean peers.
The selling spree in the past four trading days by foreign investors have also not reversed the inflows recorded so far this month, which stood at 8.6 trillion dong (S$422 million) as at Jul 28.
However, cumulative net buying remains negative, with 32.6 trillion dong withdrawn from local stocks in the year to date, following a net sale of 92.5 trillion dong last year.
As external tariff challenges ease and a potential market upgrade approaches, combined with narrowing USD-VND interest rate differentials, Yuanta's Minh believes foreign capital may keep returning to Vietnam's market in the medium term.
On Jul 9, JPMorgan Chase upgraded Vietnam to 'overweight' within Asean, expecting that equity flows to reverse into the South-east Asian country's equities amid better-than-expected US tariffs outcome and strong economic backdrop.
Despite external challenges, Vietnam's economic expansion accelerated to nearly 8 per cent year on year in the second quarter of 2025, with a major contribution from robust public spending and investment disbursement.
The government is aiming for 8.3 to 8.5 per cent gross domestic product growth for the full year, from 7.1 per cent in 2024, creating a foundation for double-digit rates in the 2026-2030 period.
Speaking at an event to mark the bourse's anniversary, Don Lam, co-founding partner and chief executive of VinaCapital Investment Management, said Vietnam's stock market should focus on several key objectives over the next five years.
These include securing an upgrade to emerging status, enhancing financial literacy, encouraging the participation of institutional investors and modernising trading infrastructure.
'Promoting domestic institutional investors is a key factor for sustainable market development as they play a crucial role in the creation and roll-out of new financial products such as pension funds,' he added, noting that retail investors currently account for 85 per cent of the bourse's daily trading volumes.
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