Stock Market 7-5: What Strategy is Suitable When Cash Flow Shows Signs of Spreading?

The Vietnamese stock market is demonstrating resilience, with the VN-Index nearing the significant 1,900-point threshold. Recent market performance indicates a shift in focus, moving away from the influence of international geopolitical events towards the more immediate drivers of the domestic economy and the performance of key blue-chip stocks. This internal focus suggests a maturing market, increasingly attuned to its own economic fundamentals.

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The current stock market performance is no longer heavily influenced by international war news. Instead, domestic economic factors and the movement of large-cap stocks are playing a leading role in investor sentiment.

While the Vingroup conglomerate has been a primary engine propelling the VN-Index, a divergence in performance is noticeable across other market segments. Many stocks are trading sideways or experiencing corrections, hinting at a selective investment environment. The traditional "Sell in May" phenomenon appears to be emerging, prompting caution among investors. However, this period also presents opportunities for discerning investors to identify undervalued stocks with strong fundamentals, especially those trading at a discount or consolidating at lower price levels, thereby enhancing portfolio safety.

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Instead of chasing stocks with excessively high valuations, experts recommend prioritizing good stocks that are undervalued or trading at low price levels. This helps the portfolio have a better margin of safety.

The robust Q1 2026 earnings season offers a significant tailwind for the market. A survey of over 800 companies, representing 97% of market capitalization, revealed a substantial 38% year-on-year increase in net profit. This widespread profitability underscores the underlying strength of Vietnamese businesses and provides a strong justification for current market valuations.

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The market's cash flow is showing signs of spreading.

For investors seeking to align with the index's trajectory, incorporating Vingroup stocks is advisable, though caution is warranted as these shares approach previous peaks. A strategy of short-term trading with a focus on quick profits (T+) and disciplined profit-taking is recommended. Meanwhile, the broader market is showing signs of broadening participation, with sectors like securities and Gelex showing strength. This diversification of leadership suggests a healthier market expansion, offering opportunities for value investors to accumulate growth stocks across various industries.

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The widespread dispersion of cash flow supported the index in overcoming the important resistance zone around 1,870 points, thereby opening up room to head towards the next resistance zone at 1,925 points.