Market likely to continue fluctuating this week

October 23, 2023 - 08:44
Last week, strong selling momentum often suddenly appeared in the afternoon sessions, catching investors off guard and negatively affecting the market’s sentiment. 
A woman watching stocks' movement on a digital board inside the Hồ Chí Minh Stock Exchange (HoSE). — VNA/VNS Photo 

HÀ NỘI — The Vietnamese stock market logged the fourth weekly loss last week despite a strong recovery in the last trading session. 

Last week, the VN-Index on the Hồ Chí Minh Stock Exchange (HoSE) was last traded at 1,108.03 points, while the HNX-Index on the Hà Nội Stock Exchange (HNX) closed Friday at 228.5 points. 

For the week, the former lost 4 per cent and the latter tumbled 4.4 per cent. Both benchmark indices fell for four consecutive weeks. 

Strong selling momentum often appeared in the afternoon sessions, catching investors off guard and negatively affecting the market’s sentiment. 

Đinh Quang Hinh, Head of the Macro and Market Strategy, Analysis Division of VNDIRECT Securities JSC (VNDIRECT), said negative sentiment weighed on the market as exchange rates hit the highest since the beginning of the year after US government bond yields reached 5 per cent, the highest in 18 months.

This development has triggered a sell-off since the beginning of the week, causing industry groups to simultaneously decline. The domino effect of forced selling which happened when securities companies sold off investors' shares to lower their debt ratio to a safe level according to regulations, caused the downward trend to extend in the following sessions. 

The VN-Index dropped sharply and fell below the important support 200-day moving average on October 18. 

Cautious sentiment causes the market’s liquidity to remain at a low level. The trading value on all three exchanges recovered slightly from the previous week, reaching an average of VNĐ18.5 trillion per session (US$754.5 million), an increase of 12.5 per cent.

Foreign investors returned to the market, net buying a total value of VNĐ909 billion, of which they net bought VNĐ779 billion on HoSE and VNĐ117 billion on HNX.

The continuous capital injections of foreign investors during the down sessions last week were a notable supporting factor for the market.

The market has reached a fairly attractive valuation zone. Although interest rates have hit the lowest in years and the profits of listed companies are starting to recover, investors should keep the wait and see approach in the short term, waiting for the market to confirm the second bottom to minimise risks and increase the probability of success, VNDirect said.

Meanwhile, Phạm Bình Phương at Mirae Asset Securities JSC (Vietnam) said that in the short-term, the market needs good cash flow to maintain the bullish trend, meaning that if the matching value on HoSE drops below VNĐ12 trillion, it will be a bad signal for the recovery trend. Investors now need to pay attention to the VN-Index’s resistance level that now is the 200-day moving average of 1,113 points.

According to Saigon - Hanoi Securities JSC (SHS), the market will fluctuate quite strongly in the near term and it will take more time to find an equilibrium area for the accumulation process. 

For the macro front, the State Bank of Vietnam (SBV) reduced the scale of T-bill issuance to VNĐ55.9 trillion from VNĐ65 trillion of the previous week and VNĐ20 trillion has matured and returned to the system.

Last week, many businesses have announced their third quarter business results. Most of companies in the securities sector recorded positive results, while the divergence among businesses in same industries is noticeable. 

In general, SHS believes the market would slow down to continue to accumulate. — VNS