P-Notes Return Signal: VN-Index Poised for New Rally, MBS Warns

Overview

MBS Securities (Chứng khoán MB) has released a report suggesting a high probability that Participatory Notes (P-Notes) foreign inflows are returning to the Vietnamese stock market, citing a shift to net buying by foreign investors starting July 28, 2026. This development could support short-term liquidity and sentiment for the VN-Index, but MBS also cautions that such flows are speculative and prone to rapid reversals, historically leading to 7-10% corrections. Key stocks showing the “footprint” of P-Notes include FPT, VIC, and HPG.

Key Facts

• MBS notes foreign investors turned net buyers from July 28, 2026, after seven consecutive months of net selling.
• The VN-Index fell 13% from its peak in July 2026, marking two consecutive months of decline.
• Historical P-Notes buying phases lasted 1.5-2 months, often followed by sharp corrections of 7-10%.
• In 2016, foreign net buying reached about VND 1,000 billion from late April to mid-August, then reversed to heavy selling.
• In late 2018-early 2019, foreign net buying totaled VND 16,500 billion, helping the VN-Index rise over 13% from its late-2018 bottom.
• In late 2022, foreign net buying reached VND 19,000 billion, driving the VN-Index from 900 points (Nov 2022) to 1,245 points (Sep 2023).
• In July 2025, foreign net buying exceeded VND 13,200 billion, lifting the VN-Index by 9.2% in one month.

What Happened

In a report covering foreign trading from July 28 to August 4, 2026, MBS Securities observed a notable shift: foreign investors returned to net buying after a prolonged selling streak. The broker attributes this buying to the possible return of P-Notes, a type of derivative instrument that allows foreign investors to gain exposure to Vietnamese stocks without direct registration. MBS notes that the buying is concentrated in blue-chip stocks such as FPT, VIC, and HPG, matching the historical “footprint” of P-Notes activity.

MBS highlights that P-Notes are highly speculative, with opaque origins and fast withdrawal speeds. Historically, they appear when the market is weak or just bottoming, then drive sharp rallies with minimal pullbacks. However, when these flows start to distribute or exit, selling pressure can concentrate on the very stocks that were previously bought. The report cites examples from 2016, 2018-2019, 2022, and 2025 to illustrate the pattern.

Market Context

As of August 8, 2026, FPT closed at VND 70,800 on HOSE, HPG at VND 22,000, and VIC at VND 215,000. The VN-Index has been in a corrective phase, falling 13% from its peak in July, with foreign investors net selling for seven consecutive months before the recent turnaround. The potential return of P-Notes could provide a short-term boost, but MBS warns that the same flows could trigger sharp corrections when they reverse, as seen in past cycles. The market’s reliance on such speculative inflows underscores its vulnerability to sudden capital outflows.

Strategic Significance

For long-term investors, the possible return of P-Notes is a double-edged sword. On one hand, it can provide the liquidity and momentum needed to break the current downtrend, potentially leading to a new rally. On the other hand, the speculative nature of P-Notes means that gains may be short-lived, and the market could face severe corrections once these flows exit. This pattern highlights the importance of monitoring foreign flow data and the composition of buying activity. Stocks like FPT, VIC, and HPG, which are likely targets of P-Notes, may experience higher volatility, offering both opportunities and risks. Investors should focus on fundamentals rather than chasing short-term momentum driven by speculative capital.

What to Watch

• Continuation of foreign net buying in the coming weeks, especially in FPT, VIC, and HPG.
• Any signs of P-Notes distribution or reversal, such as sudden increases in selling pressure.
• VN-Index price action around key resistance levels, particularly if it approaches previous highs.
• MBS’s next weekly foreign flow report for updates on P-Notes activity.
• Regulatory announcements or changes in foreign ownership limits that could affect P-Notes usage.