Vietnam stock market: Positive signals and investment opportunities

The Vietnamese stock market has been riding a wave of good news, including easing U.S.-China trade tensions, the successful rollout of the new trading system KRX, and a surge in newly opened trading accounts, opening up immense opportunities for investors.

On Monday, global markets rallied after reports emerged that the U.S. and China had agreed to suspend new tariffs for 90 days and substantially reduce existing duties.

In response, the VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), surged nearly 16 points to close at 1,283.26 and continued gaining momentum with a 10.17-point rise to 1,293.43 points on Tuesday.

In addition to the cooling of trade tensions, the Vietnamese market has benefited from other bullish indicators. According to the Vietnam Securities Depository and Clearing Corporation (VSDC), April saw the addition of 194,000 new trading accounts, a sharp increase from March and the highest in eight months. The total number of accounts is now approaching 10 million.

Tran Hoang Son, director of market strategy at VPBank Securities (VPBankS), noted that surges in new account openings often coincide with periods of high volatility in the VN-Index. In April, the index experienced a 23% swing between its peak and trough - an environment that encouraged cash-rich investors and newcomers to seize the opportunity.

Historically, spikes in new account numbers followed significant market corrections. For example, during February-March 2022 and in 2020, account openings surged after a roughly 40% decline due to the Covid-19 pandemic. Similarly, increased investor activity was observed during market rallies in October-December 2020 and July-August 2022.

The smooth implementation of the KRX trading platform on May 5 is also seen as a milestone that could help elevate Vietnam’s classification from a “frontier” to an “emerging” market by 2025 - an upgrade that could attract large-scale foreign capital inflows. This comes as global funds increasingly shift their focus to emerging markets like mainland China, Taiwan, and South Korea.

In the long run, the KRX system is expected to enable the introduction of modern trading products such as same-day (T+0) trading, short selling, options contracts, and risk-hedging tools. These innovations are likely to increase market volatility, drive up trading frequency, enhance liquidity, and attract institutional investors.

“There are not only strong market movements but also multiple reasons for optimism -ongoing tariff talks, the prospect of a market upgrade, and the successful KRX rollout - all of which are likely to attract cash-rich newcomers to the market from now until the year-end,” Son commented.

Foreign capital flows also provide a strong tailwind. In the first trading week after the April 30-May 1 holiday, foreign investors net bought over VND1 trillion ($38.5 million) in Vietnamese stocks.

The VPBankS strategist pointed out that developments in tariffs, a sharp depreciation of the U.S. dollar, and surging bond yields have made dollar-denominated assets less appealing, prompting a reallocation of capital away from U.S. markets.

The dollar has fallen around 7.5% year-to-date, while other currencies have rebounded, most notably, the Japanese yen (+10%), South Korean won, British pound, and euro.

Comparative performance shows that while the S&P 500 went down nearly 4% year-to-date as of late April, indices for Europe, emerging, and frontier markets, including MSCI Europe, have rallied over 5%. This shift signals a redirection of global capital toward these regions.

The return of foreign investors to net buying in Vietnam is a positive signal, suggesting that broader regional momentum is lifting the Vietnamese market. A market status upgrade could further accelerate foreign capital inflows.

What stocks should investors buy?

Amid this wave of positive developments, the market has steadily recovered, closing the gap caused by early April’s tariff shock.

The VPBankS expert recommended that investors seeking new entry points focus on stocks that have bottomed out and remain well below pre-April correction levels, particularly in the industrial real estate sector. This strategy aims to “buy the dip and ride the rebound.”

Investors may also consider deeply corrected technology stocks that have stabilized and are beginning to rebound, such as FPT of FPT Corporation and CTR of Viettel Construction JSC. With major economies resuming trade negotiations, these stocks could regain upward momentum.

In terms of leading sectors, banking remains a favorite in the short term. Although bank stocks took a pause during the recent holiday, they have regained momentum and could be key drivers in helping the VN-Index break through the 1,280-point mark and closing the gap from the early April decline.