A statue of a bull and bear outside of the Hồ Chí Minh Stock Exchange. Photo courtesy of HoSE

HÀ NỘI — The stock market experienced a choppy week after many events, from the collapse of the US-based Silicon Valley Bank (SVB) to a rate cut from the Bank of Vietnam (SBV), which had mixed impacts on sentiment.

Analysts said that the meeting of the US Federal Reserve on Tuesday will be the focus of global financial markets this week. 

The VN-Index on the Hồ Chí Minh Stock Exchange (HoSE) closed last week at 1,045.14 points, while the HNX-Index on the Hà Nội Stock Exchange (HoSE) was at 204.47 points.

Both benchmarks posted a weekly loss, with the former down 0.8 per cent and the latter down 1.6 per cent.

The market corrected earlier in the week, affected by fears of a banking crisis after SVB’s collapse. 

Cautious sentiment caused the VN-Index to fall back to the support zone of 1,030-1,040 points. 

But the SBV’s announcement on Wednesday about reducing some regulatory interest rates helped lift the market, and the VN-Index soared 2.1 per cent before returning to the downtrend at the end of the week. 

The market liquidity, however, continued to improve last week, and foreign investors also kept disbursing capital into the market. 

Specifically, they net bought more than VNĐ2.1 trillion (US$9.2 million) on the southern exchange, up 136 per cent over the previous week, and net bought a value of VNĐ168 billion on HNX, an increase of 76 per cent. 

Đinh Quang Hinh, head of the Macroeconomics and Market Strategy Department of VNDIRECT Securities Company (VNDirect), said that the central bank’s recent move to lower rates shows the consistency in operating orientation for credit institutions on actively reducing costs and reducing lending interest rates to support enterprises.

"We also hope credit growth will improve over the low level announced by the State Bank in the first two months of this year," said Hinh.

If the US Federal Reserve's rate peaks sooner than anticipated, it will encourage SBV to reduce its deposit interest rate, improving the accessibility of capital for both individuals and businesses.

The Fed's rate is now anticipated by the markets to reach its apex at roughly 5.15 per cent in May rather than at the end of the year.

Investors’ attention will also shift to the Fed’s meeting on Tuesday.

In the short term, domestic cash flow is still relatively weak because interest rates are still higher than before the COVID-19 pandemic, while bottlenecks in corporate bonds and real estate have not been completely resolved. 

Besides, the fact that the Fubon ETF fund splits disbursements into the market reduces the positive effect of foreign cash flow.

Therefore, it will be difficult for the domestic market to break through in the short term, and the VN-Index is likely to trade in a narrow range of 1,030-1,070 points this week.

As the market has not yet formed a clear uptrend, buying and holding stocks should only be done with a long-term vision of 6 months to a year.

Meanwhile, short-term trading has high risks and is only suitable for professional investors. VNDirect’s experts said that portfolio management should still be a top priority, maintaining a moderate proportion of stocks and limiting the use of margin lending at the current stage to control risks.

With a rather optimistic view, analyst Phạm Bình Phương from Mirae Asset Securities (Vietnam) said that despite negative news that greatly affected the VN-Index last week, the index still maintained the important support level at the 20-week moving average (MA).

Mirae Asset considers this to be a relatively positive sign, supporting the recovery trend from early March 2023 until now.

In contrast, MB Securities Company said that domestic demand was not very enthusiastic, even with the supportive news of the rate cut.

Technically, the market is likely to move sideways in a narrow range this week, and the liquidity is also expected to decrease. — VNS