Market mood swings as investors eye Fed and FTSE

Market mood swings as investors eye Fed and FTSE

Following the September 2 holiday, Việt Nam’s stock market attracted strong investor attention, driven by two key factors: expectations of a US Federal Reserve interest rate cut and the anticipated outcome of FTSE Russell’s market reclassification review.

Investors monitor the stock market. — Photo baotintuc.vn

Việt Nam’s stock market may see renewed turbulence this week following the National Day holiday, as investors brace for two pivotal global developments: the US Federal Reserve’s next policy move and FTSE Russell’s highly anticipated market upgrade review.

Expectations are mounting that the Fed could lower interest rates by 0.25 percentage points – its first cut since December 2024. If realised, such a move would ease pressure on the exchange rate, giving the State Bank of Việt Nam more room to maintain supportive monetary policies. Analysts say this would help stimulate capital flows into equities, improve liquidity and lift investor sentiment.

At the same time, FTSE Russell’s market reclassification decision looms large. In its March 2025 review, Việt Nam had already fulfilled seven out of nine required criteria. Since then, additional regulatory steps have been introduced to address the remaining hurdles.

A successful upgrade to secondary emerging market status could prove transformative. Analysts estimate it would prompt an immediate wave of around US$1 billion in passive ETF inflows from funds tracking the FTSE Emerging Markets Index – a benchmark with nearly $320 billion in assets under management. Active capital flows could be significantly larger.

With these events on the horizon, securities firms predict the VN-Index could retest the 1,690–1,700 resistance zone in the short term. However, volatility, sector rotation and profit-taking pressure may temper gains.

Yuanta Việt Nam offered a cautious note, warning that September tends to be a 'negative season' due to weaker individual investor cash flows. The firm advised maintaining low equity exposure until more definitive signals emerge.

Meanwhile, Viet Dragon Securities (VDSC) remained upbeat, forecasting potential upside if rotational funds continue flowing into mid- and small-cap stocks with solid fundamentals. SHS advised a balanced portfolio, favouring sector leaders in banking, securities, infrastructure and export industries.

August 2025 was a milestone month for Việt Nam’s bourse, with the VN-Index jumping nearly 12 per cent month-on-month to close at 1,682.21 points – its highest since 2022. The VN30 surged 15.49 per cent to 1,865.38 points. Liquidity also broke records, with more than 35 billion shares traded on HoSE, averaging 1.67 billion shares daily.

The rally was led by banking and securities stocks, fuelled by credit expansion and re-rating expectations. Other gainers included property, insurance, steel and retail. However, technology, textiles, and industrial parks posted modest corrections.

Despite strong domestic momentum, foreign investors were net sellers in August, offloading over VNĐ42 trillion in HoSE-listed stocks. Experts viewed this as a temporary portfolio adjustment, maintaining that Việt Nam’s fundamentals – including a relatively low market P/E of 15.2 and strong earnings outlook – continue to support long-term optimism. 

Bizhub