Market expected to move positively on domestic cash flows

Outside the headquarters of the Hà Nội Stock Exchange (HoSE). — VNS Photo Ly Ly Cao

HÀ NỘI — The stock market saw choppy trading throughout the week but still posted a weekly gain with the VN-Index retesting the threshold of 1,100 points.

The highlight lifting the market was the strength of domestic cash flows, shadowing the record net outflow of foreign capital. Experts believe it is likely to support the market this week. 

On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index closed last week at 1,124.44 points, while the HNX-Index on the Hà Nội Stock Exchange (HNX) last traded at 231.2 points. 

For the week, the former gained 2.02 per cent and the latter was up 2.18 per cent. Both benchmarks increased for the second straight week. 

Liquidity rose sharply on both main bourses and was also the highest in the last 11 weeks. Of which, liquidity on HoSE soared 59.9 per cent from the previous week to VNĐ104.39 trillion (US$4.3 billion). And that on the northern exchange jumped 68.4 per cent to nearly VNĐ13 trillion. 

Last week, foreign investors recorded a net selling of nearly VNĐ4.1 trillion. This marks their fifth consecutive week of net selling and also the week with the highest net selling volume since the beginning of the year. Cumulatively, since the start of the year, foreign investors have sold a significant amount of nearly VNĐ17.1 trillion.

Despite experiencing significant volatility during the session on December 7, the overall outlook for the domestic stock market last week was positive. 

The market also received a boost from several encouraging developments. One notable event was the meeting between the Prime Minister and the banking sector, aimed at stimulating credit growth and easing the challenges faced by businesses in accessing capital for their operations. 

While achieving the credit growth target of 14.5 per cent may be difficult, there is a growing likelihood of improvement. If effective measures to enhance capital access for businesses are implemented, it will lay the foundation for growth in 2024.

Moreover, there are other positive developments coming from the banking industry, such as plans to conduct a study and submit a report to the government regarding the extension of the implementation period for the circular on debt restructuring, while keeping debt groups intact.

The market has also witnessed a stable return of liquidity through Treasury bills.

Both domestic and global markets will shift their focus to big international events this week. Investors are waiting for the final monetary policy meetings of 2023 by several major central banks, especially the US Federal Reserve. 

The markets’ participants widely expected that the Fed would continue to keep the rates unchanged at this meeting, while some predicted the Fed’s first rate cut would happen next year. 

Also this week, General Secretary of the Chinese Communist Party and President of China Xi Jinping and his spouse will make an official visit to Việt Nam starting on December 12, and there is high expectation about the spillover effect of the visit to all levels and sectors. 

Additionally, exchange-traded funds (ETFs) will be restructuring their portfolios this week.

Regarding the internal factors of the market, the most notable highlight is the domestic capital flow. Despite record net selling by international investors last week, the domestic capital flow was showing significant strength. Liquidity and robust domestic capital flow are fuelling hopes that the market will continue to rise in the short term.

Technically, the market is still trading within a consolidation range, with the lower boundary around 1,075 points and the upper boundary in the range of 1,125 – 1,130 points. 

With the return of liquidity and the leadership of blue-chip stocks, particularly in the banking sector, the market is expected to surpass the November peak and head for the target range of 1,140 – 1,160 points by the end of the year. 

According to experts at Saigon – Hà Nội Securities JSC (SHS), the market is still in its second recovery phase following a significant decline. “And we believe that after the rebound, it will gradually form a new accumulation pattern. In the short term, we expect the VN-Index to soon surpass the resistance level of around 1,130 points and aim for the 1,150-point level,” said SHS. — VNS