Market in accumulation phase as VN-Index eyes 1,300-point mark

Customers conduct transactions at the headquarters of Bảo Việt Securities Corporation in Hà Nội City. The stock market witnessed a positive recovery week, with the VN-Index increasing in all five sessions. — VNA/VNS Photo

HÀ NỘI — The stock market witnessed a positive recovery week, with the VN-Index gaining in all five sessions due to macroeconomic data exceeding forecasts.

Despite the recovery, investor sentiment remained cautious, as evidenced by declining market breadth and significantly reduced trading volumes towards the week’s end.

On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index closed the week at 1,283.04 points, while the HNX-Index on the Hà Nội Stock Exchange (HNX) ended at 242.31 points.

Both indices recorded significant weekly gains, with the former increasing by 3.03 per cent and the latter by 1.99 per cent.

Despite the positive performance in terms of points, the market saw a notable decline in liquidity. The average daily transaction value across the market was VNĐ16.699 trillion per session, a significant drop of 33.3 per cent compared to the VNĐ25.032 trillion recorded the previous week. This decline in liquidity indicates that while the market was able to post gains, investor enthusiasm was relatively muted.

Foreign investors continued their trend of net selling, although the value of net sales decreased significantly compared to the previous week. The total net selling value for the week reached VNĐ2.309 trillion on the HoSE.

Phan Tấn Nhật, Head of Analysis at Saigon-Hanoi Securities (SHS), said “The Ministry of Planning and Investment reported that multinational companies are making significant investments and expanding projects in Việt Nam, partly due to a stable investment environment and supportive policy commitments.”

However, he warned that the introduction of a global minimum tax policy could diminish the effectiveness of Việt Nam’s corporate income tax incentives if adjustments are not made.

“This could potentially reduce Việt Nam’s attractiveness to multinational corporations, impacting the country’s competitive position in the region and its ability to attract selective, high-quality foreign investment,” Nhật added.

As the market enters the third quarter, the initial trading week has been marked by positive sentiment. Technically, the VN-Index increased for the fourth consecutive session, surpassing the 20-day average price level of around 1,275 points. In the short term, the index is expected to target the 1,300-point level within the accumulation range of 1,250 to 1,300 points.

Market dynamics indicate that liquidity remained low throughout the week, averaging around 65 per cent of the typical volume, highlighting significant differentiation among stocks. The VN-Index might encounter resistance around the 1,285-point mark, but a positive sign is that several stock groups have shown strong recovery, with many surpassing previous peaks.

The market received a boost from positive socio-economic data, including a GDP growth rate of 6.93 per cent in the second quarter of 2024. This backdrop has supported market sentiment and contributed to the week’s gains.

Analysts from Viet Dragon Securities have forecasted a positive outlook for July, driven by the upcoming earnings season. They anticipate that listed companies’ revenues will begin to recover, although they may still be lower than the previous year. Additionally, the economy’s capital absorption capacity is gradually increasing, particularly towards the end of the year, which could lead to higher interest rates.

While the VN-Index has the potential to reach 1,300 points in July, economic challenges could bring the index back to the 1,240-point level or even 1,180-1,220 points in the third quarter if the State Bank of Vietnam raises policy rates. — VNS