Vietnamese Stocks Decline: Why Big Profits Aren't Attracting Investment

The Vietnamese stock market experienced a notable downturn on May 11, with the VN-Index shedding nearly 20 points to close at 1,895.5. This pullback occurred despite many businesses reporting robust first-quarter earnings, a situation that has left investors questioning the disconnect between corporate performance and stock valuations.

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Stock prices reflect expectations. The stock market operates based on expectations, so many businesses, even with strong profit growth, may not see their stock prices rise significantly after the report is released.

According to Huynh Anh Huy, Director of Analysis at Kafi Securities, this phenomenon is not entirely unusual. He points to several factors, including subdued market liquidity. With capital costs rising, some funds are migrating to savings accounts or fixed-income products rather than flowing into the stock market as before. This makes the market more selective, concentrating capital on leading stocks rather than a broad dispersal.

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The market is not maintaining its green color despite efforts to increase points at the beginning of the session. Liquidity increased compared to the previous session, reflecting investor profit-taking pressure at the historical peak.

Furthermore, Huy notes that strong corporate results are often anticipated and reflected in stock prices before they are officially announced. The stock market operates on expectations, meaning that even companies with significant profit growth may not see substantial price increases post-announcement. This cautious sentiment, following a period of sustained gains, has led analysts like those at Rong Viet Securities (VDSC) to advise investors to slow down, observe supply-demand dynamics, and prioritize risk management. The market's next support level is seen around 1,875 points.

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Investors should slow down and observe the supply-demand dynamics at the support level. While the upward trend is still supported by technical signals, investors need to be wary of potential risks in some stock groups, temporarily prioritizing risk management and protecting gains, avoiding overbought conditions.