Identifying key drivers for VN-Index in second half of 2025

Identifying key drivers for VN-Index in second half of 2025

Vietnam’s stock market is showing strong momentum heading into the second half of 2025, buoyed by economic growth, policy support, and potential reclassification, but key risks remain.

Speaking to VIR on June 9, Nguyen Minh Hanh, head of research at Hanoi-based SHS Securities, said this could be an unpredictable period for the stock market

He revealed that this month, the market would be influenced by the final developments in international trade negotiations, particularly the possibility of a temporary suspension of retaliatory tariffs.

Additionally, the effects of tariff policies are beginning to be more clearly reflected in corporate earnings results.

“Market liquidity is expected to continue rotating, though with more evident divergence, focusing on sectors less affected by tariffs such as residential real estate, construction, financial services, and utilities,” Hanh assessed.

In this context, SHS has maintained its year-end VN-Index target range at 1,400-1,420 points, representing an increase of around 11-12 per cent compared to 2024, as outlined in its strategic outlook at the outset of the year.

Regarding market drivers for June and the second half of 2025, Hanh highlighted four key supporting factors.

First is the potential temporary suspension of tariffs and trade negotiations that may lead to lower tariff rates.

Second is the sustained economic growth and corporate earnings reported in the first half of 2025, buoyed by a still-low interest rate environment.

Third is the anticipated growth momentum stemming from Resolution 68-NQ/TW issued by the Politburo on private sector development.

Final is the smooth operation of the KRX trading system, an advanced trading system developed by Korean Exchange (KRX), along with the outlook for an upgrade of Vietnam’s stock market classification.

Bui Nguyen Khoa, deputy head of research at BIDV Securities (BSC), noted that the VN-Index is currently in the process of establishing a clearer trend, accompanied by improving liquidity.

“This is a continuation of the recovery momentum after the sharp correction caused by tariff-related news in early April. The index remains in a medium- to long-term uptrend, supported by solid fundamentals such as stable economic growth, strong Q1 earnings across several sectors, and increasingly transparent domestic policy management,” said Khoa. The market still lacks decisive breakout momentum, as capital mostly rotates quickly among large-cap stocks or sectors with short-term catalysts, Khoa added.

For the short term, Khoa recommended potential sectors that have shown significant improvement in the first quarter (Q1) results and are likely to maintain growth momentum into Q3, including retail, real estate, utilities, and chemicals.

For medium- to long-term strategies, IT and banking stocks are increasingly being favoured due to their stable growth trajectories and high potential, especially given the ongoing credit expansion, financial digitalisation, and technological advancement both domestically and globally.

Tran Khanh Hien, head of research at MB Securities (MBS), expressed optimism that official updates on tariff negotiations would boost market sentiment.

She also noted that a potential upgrade to emerging market status by the FTSE in September, if realised, would be a major positive development, particularly in terms of attracting renewed interest from foreign investors.

Additionally, with a significant portion of the stock market comprised of real estate firms, any positive news regarding the resolution of legal bottlenecks in real estate projects and improved capital flows in this sector could lead to the revaluation of listed property stocks, drawing capital back into the market and helping lift the VN-Index.

“On that basis, from a positive standpoint, we forecast that the VN-Index could reach 1,380 points in June, accompanied by net buying from foreign investors,” Hien predicted.

However, the MBS expert also cautioned about several existing risks.

First, in the forthcoming weeks, the United States may finalise bilateral trade agreements with major partners such as Japan, South Korea, India, and potentially Vietnam. However, given the governance approach of current US administration, these agreements are considered experimental and subject to abrupt changes.

Second, interest rates remain the most sensitive factor for the stock market. Monetary policy now faces a new challenge, as the US Federal Reserve is struggling to lower interest rates, while Vietnam and other emerging markets continue to maintain an accommodative monetary stance.

The market currently expects the Fed to cut interest rates twice this year. As such, if those rate cuts fail to materialise as anticipated, the market could react negatively.

In May, Vietnam’s stock market saw a strong rebound. By the end of May, the VN-Index had reached 1,332 points, marking an increase of 8.6 per cent, the strongest monthly gain since the beginning of the year, following heightened volatility in April.

Looking ahead to September, market expectations are high regarding a potential upgrade in classification, which could mark a turning point. A stronger presence of institutional funds, positioning ahead of the upgrade, expected to take effect from March 2026, may lead to a noticeable return of foreign capital inflows, providing more sustainable support for the market.

VIR