Prior to Thursday, the VN-Index had gained a total of 36.5 per cent in 2.5 months to a 3.5-month high of 900 points from its 2.25-year low of 659.21 points. — Photo tinnhanhchungkhoan.vn

HÀ NỘI — The Vietnamese stock market is forecast to struggle this week with rising caution among investors as they wait for the market to reach its balance point.

Việt Nam’s benchmark VN-Index on the Hồ Chí Minh Stock Exchange (HoSE) last week ended at a three-week low of 863.52 points, falling total 25.6 per cent during the week.

Market trading liquidity increased sharply from the previous week. An average of nearly 589 million shares were traded in each trading day, worth VNĐ8.1 trillion (US$347.6 million).

“The market ended a five-week gaining streak as the VN-Index gave up the resistance of 910 points on pressure from the international markets,” Sài Gòn-Hà Nội Securities (SHS) said in its weekly report.

The VN-Index posted its biggest loss in seven weeks on Thursday as it tumbled 3.63 per cent as a large-scale sale was triggered following a pessimistic economic outlook by the US central bank.

The market was even pushed back to a one-month low of 841 points on Friday but purchasing for discounted stocks helped narrow the loss.

“The index finished the week in the zone of 840-880 points so there will be struggles in coming days,” SHS said.

The VN30 futures, which matures on June 18, ended last week at 805 points while its underlying asset VN30-Index finished at 807.76 points.

“The gap between the blue-chip tracker VN30-Index and its futures indicates investors are becoming cautious,” SHS said.

The US central bank Federal Reserve at its meeting on Wednesday night kept interest rates unchanged and delivered a gloomy economic outlook for the world’s largest economy.

Worries about the second coronavirus wave on states’ re-opening and emerging tensions between the US and China had a negative impact on market sentiment.

According to analysts, the confidence in Vietnamese shares may be dragged down as strong domestic purchase, most of which comes from “F0” investors – new and unexperienced ones – has kept the VN-Index rallying since late March.

Prior to Thursday, the VN-Index had gained a total of 36.5 per cent in 2.5 months to a 3.5-month high of 900 points from its 2.25-year low of 659.21 points.

More than 100,000 new accounts were opened in the past three months, with about 68,600 accounts being registered in March and April.

Domestic individual investors have been hunting beaten-down stocks during the COVID-19 pandemic, keeping the Vietnamese stock market progressing.

But amid pressure from international stocks, individual investors are the most vulnerable due to a lack of experience and information.

“When the VN-Index cannot conquer 900 points, it makes investors believe the market is running out of momentum,” and “large-cap stocks are stalling,” analyst and trader Nguyễn Hồng Điệp told ndh.vn.

“Secondly, investors look at the US stocks and any downtrend of the US market worries them, thus, triggering the sell-off,” he said.

The US stock market progressed on Friday night as bargain hunters returned to scoop stocks up following their big losses the previous day.

High individual purchasing power means the market bubble inflates, so it must decline to make the market grow sustainably, said.

Phan Dũng Khánh, director of investment consultancy at Maybank Kim Eng, said the 2.5-month rally has made stocks become more expensive given the downtrend of the macro-economy.

A downtrend is needed to help the market increase in the long term, he said, as individual investors will run from the market and leave the room for institutional ones to fill in.

While individual investors sought exit from the market, foreign ones net-bought total nearly VNĐ418.5 billion worth of local shares last week. Net foreign selling was VNĐ315 billion in the previous week.

Aside global stocks, the shake-up in the US-based exchange-traded fund VanEch Vectors Vietnam ETF’s portfolio will also affect the market trading this week, Bảo Việt Securities (BVSC) said in a note.

The fund on Saturday announced Vietnamese stocks are kept at 15 in the list of 25 investees but total weight of Vietnamese shares fell to 67.48 per cent from 67.98 per cent.

The fund will reduce its ownership at residential property firm Vinhomes (VHM), aviation firm Vietjet (VJC), consumer staples firm Masan (MSN), PetroVietnam Power (POW), sugar company Thành Thành Công-Biên Hòa JSC (SBT), and electrical firm Gelex (GEX).

Stakes in dairy producer Vinamilk (VNM), steel maker Hòa Phát (HPG), insurer Bảo Việt Holdings (BVH) and SSI Securities (SSI) will be raised.

“The VN-Index is expected to recover and head toward the resistance zone of 883-891 points early next week,” Bảo Việt Securities (BVSC) said.

The index is forecast to “receive support from the zone of 840-850 points,” the company said. — VNS