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“Sell in May” is a well-known stock investment strategy that suggests investors sell shares at the start of May and temporarily step aside from the market, based on the historical notion that performance tends to weaken during this period.
In Vietnam, May often coincides with a lull as the Q1 financial reporting season and annual general meetings of shareholders come and go. However, historical data indicates that the “Sell in May” effect is not clearly visible in the country’s stock market.
Over the past 25 years, the VN-Index has risen in May 12 times, implying a probability of nearly 50%. Looking at a shorter window, the last 10 years show a higher likelihood of a May gain, at about 70%.
Since the Covid-19 period—when investor participation increased significantly—the “Sell in May” effect has appeared to fade.
While historical patterns can be indicative, market conditions vary by period. At present, the market has just recovered in April, regaining nearly all losses linked to geopolitical tensions in the Middle East in March.
In index terms, the VN-Index has returned close to its historical peak. However, gains have been concentrated in specific stock groups rather than broadly across the market. As a result, profit-taking pressure does not appear widespread.
Many blue-chip stocks are also trading at comparatively attractive valuations after the Q1 earnings season. Still, profit-taking pressure on “hot” stocks that have risen sharply in recent times could weigh on market sentiment.
Commenting on May market prospects, Mr. Nguyen Duy Hung, Chairman of SSI, said in a recent Facebook post that “Sell in May” is a familiar saying, but the market does not operate on a calendar; it operates on expectations. He added that understanding what investors are buying and why they hold is more important than any rule.
Mr. Luong Duy Phuoc, Director of Market Research at Kafi, similarly argued that the strategy should not be treated as a rigid rule. He noted that May could be a period to test liquidity endurance: if liquidity remains solid and flows into other sectors, overall risk may not be too large. He also pointed out that valuations are not overly high overall, except for a few blue-chip stocks, which reduces the likelihood of a deep decline.
Experts also caution that short-term volatility is possible. Although the VN-Index has risen sharply, gains have not been evenly distributed. The main contributions have come from the Vingroup stock group, while many other stocks remain in accumulation, flat, or range-bound.
Kafi’s experts said that if a correction occurs, pressure could become more evident on the index—particularly when large-cap groups pause. For the rest of the market, since it has not surged, the risk of a deep drop is not considered a major concern. Instead, this period is expected to feature clearer sector differentiation rather than a broad-based decline.
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