An investor holds a tablet showing stock indices. The Việt Nam stock market still faces many challenges from external macro factors, especially those related to tight monetary policy, and unpredictable global inflation when energy and food prices escalated due to the impact of the Russia-Ukraine conflict. — VNA/VNS Photo

HÀ NỘI — The VN-Index is recovering quickly after plunging to 1,165 points in May, however, analysts said there was not yet enough strong information to support the uptrend.

Analysts forecast that VN-Index will move in the range of 1,240-1,350 points until the market witnesses credible signs to determine the new trend.

Lack of motivation

Nguyễn Thị Phương Lam from the Strategy Department at Việt Dragon Securities Company (VDSC) said the liquidity of the market in June would improve, but slightly lower than the average of May.

“Việt Nam stock market still faces many challenges from external macro factors, especially those related to tight monetary policy, unpredictable global inflation when energy and food prices escalated due to the impact of the Russia-Ukraine war,” Lam said.

According to Lam, these factors will continue to affect domestic inflation, creating a great obstacle to the rise of the stock market in the context of increasingly cautious cash flow and a lack of supportive information.

Hoàng Việt Phương, director of the Centre for Analysis and Investment Advisory within SSI Securities Inc, said that China's "Zezo COVID" policy also indirectly affected Việt Nam's stock market.

Currently, both the US stock market and the Vietnamese stock market have decreased by nearly 14 per cent compared to early this year, meaning that the above challenges have partly reflected in stock prices, she said.

In Việt Nam, Phương said that cash flow from individual investors is unlikely to improve strongly in June because market sentiment is still cautious.

“The real estate market is expected to face certain difficulties as the price level is already high in the context of high interest rates,” Phương said.

“The real estate market is a place where large cash flows are flowing, so the stability of this market will directly affect the financial market, including the stock market and listed real estate businesses.”

On the market, data from SSI Securities Inc (SSI)'s report showed that the net buying by foreign investors was approximately VNĐ3 trillion (US$129 million) in May and focused on banking, real estate, and retail groups.

Việt Dragon Securities Co’s analysis team said that ETFs, such as DCVFM VN Diamond or Fubon FTSE, can maintain a net buying state in the short term thanks to internal factors. The Vietnamese stock market is still attractive compared to a number of countries in the region.

Therefore, the VDSC recommends that investors can take advantage of the cash flow from ETFs for short-term options.

The trend in the 1,280 point area

Despite holding a cautious view of the market's prospects, Phương predicts that in the second half of this year, the stock market can count on sectors that were affected by the COVID-19 pandemic and is likely to perform better than in the same period last year. The disbursement of public investment capital is being accelerated and the stimulus packages scheduled to be implemented early will be the driving force for economic growth.

From a technical point of view, SSI's analysis team forecast that the 1,280 point area will determine the trend of the VN-Index in the June period. In the case that this area is maintained, the VN-Index is likely to extend the technical recovery momentum to the zone of 1,300-1,330 points. However, if the 1,280 point area can’t be maintained, the VN-Index may correct again to the near support area of ​​1,250-1,261 points.

With a similar view, VDSC's analysis team expects that the domestic stock market will not witness similar sell-off sessions and the VN-Index will fluctuate in the range of 1,240-1,350 points until the market has more clear signs for the index to determine the trend.

The proper investment strategy, for now, should be medium and long-term strategies, VDSC said.  — VNS