Market expected to accumulate and recover, pushing VN-Index towards 1,260 points

A customer conducts a transaction at Baoviet Securities Company headquarters in Hà Nội City. — VNA/VNS Photo

HÀ NỘI —Following the adjustments seen in the previous week, the stock market continued to experience a volatile week. The market declined sharply in the first two sessions, causing the VN-Index to test the technical limit of 1,220 points before rebounding. At the same time, foreign investors halted their consecutive weekly net selling since February.

Following a dynamic trading week in early July, the Vietnamese market experienced three consecutive weeks of declines, hitting its lowest point at 1,218 points last week. Although the index recovered afterwards, liquidity significantly dropped. The Vietnamese stock market has been described as “bleak” despite positive macroeconomic numbers. 

On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index closed the week at 1,242.11 points, while the HNX-Index on the Hà Nội Stock Exchange (HNX) ended at 236.66 points.

Both indices recorded weekly declines, with the former decreasing by 1.79 per cent and the latter by 1.6 per cent.

The average daily transaction value across the market was VNĐ16.12 trillion (US$767.3 million) per session, a significant drop of 17.2 per cent compared to the VNĐ19.48 trillion recorded the previous week.

Foreign investors returned to net buying after many consecutive weeks of net selling since late February. On the HoSE, they net sold for two sessions and net bought for three sessions. Overall, they net bought VNĐ387 billion on the southern bourse.

According to Phan Tấn Nhật, head of analysis at Saigon-Hanoi Securities, some organisations (HSBC, Citibank) have provided positive assessments of Việt Nam’s economic outlook, based on the strong GDP growth in Q2 and gains in exports and foreign direct investment.

Specifically, HSBC has raised its 2024 GDP growth forecast for Việt Nam to 6.5 per cent (from 6 per cent previously) and lowered its inflation forecast to 3.6 per cent. During the week, the US Department of Commerce decided to delay its announcement on whether Việt Nam qualifies as a market economy (extended by one week to 2 August) due to recent global software issues. 

Nhật said that after a week of trading under adjustment pressure with unusual trading volumes, particularly due to information about margin loans reaching new highs at the end of Q2, the stock market experienced another less positive week with significant declines to the 1,200-1,220 point support range. This range combines the 200-day moving average with the highest prices 2018 and the five-year average price.

According to experts at SHS Securities, in the short term, the VN-Index is testing the 1,255-point range (the highest level of 2023) and the short-to-medium term trend line connecting the lowest points from November 2023 to July 2024.

In the medium term, Nhật noted that the market’s accumulation is weak, similar to the short-term trend, as the VN-Index failed to maintain the trend line from November 2023 to the present, as well as the balance range of 1,245-1,255 points. Therefore, the market is transitioning to accumulation within the VN-Index range of 1,200-1,255 points.

The analysis team from Vietcombank Securities (VCBS) noted that on the daily chart, the index is moving within the Bollinger Bands and closely follows the support and resistance indicators. Additionally, the Chaikin Money Flow (CMF) indicator is rising, indicating that the buying force has become more proactive in the market. If the demand remains stable and the money flow continues to diversify, the market is expected to accumulate and recover, aiming for the VN-Index to reach 1,260 points in the coming week.

Regarding trading strategies, the VCBS analysis team suggested that the stock market is showing relatively clear signs of recovery with stable money flow distribution among sectors. Therefore, investors can consider gradually disbursing funds into stocks showing recovery signs. — VNS