Market to continue decline despite recovery efforts, signals indicate short-term risks

Two traders watch stock indices on an e-board. It is advisable for investors to exercise caution, closely monitor supply and demand, and reassess the market’s condition in the near future. VNA/VNS Photo

HÀ NỘI The market is likely to continue its decline in the short term this week, with the support zone of 1,100 points providing temporary relief before reassessing supply and demand dynamics, based on the current market conditions and recent signals.

On the Hồ Chí Minh Stock Exchange, the VN-Index inched down 0.71 per cent to close at 1,102.30 points, widening the three-day loss to more than 2 per cent.

An average of 724 million shares were traded on the southern exchange during each session last week, worth VNĐ15.5 trillion (US$738.5 million).

According to Việt Dragon Securities Co, liquidity increased on Friday, showing that supply is proactive and putting pressure on the market, while cash flow is still generally cautious. The selling pressure mostly came from Foreign Investors, especially ETF restructuring activities at the end of the trading session.

The market has gone through three sessions of decline and is approaching the support zone of 1,100 points, retesting the Gain Gap zone of 1,102 – 1,108 points. It is expected that this area will temporarily help the market slow down the decline and have a recovery response to recheck supply.

“However, the recent reversal signal has created short-term risks for the market, and the area of 1,110 – 1,115 points is becoming a resistance area,” it said.

“Therefore, investors need to slow down and observe supply and demand in the near future to reassess the market state. Currently, investors should take advantage of the recovery to take short-term profits or structure your portfolio to minimise risks.”

Selling pressure, particularly from Foreign Investors and ETF restructuring activities, has been a significant contributor to the market’s decline towards the support zone of 1,100 points, said vietstock.vn.

This level will likely provide temporary relief and potentially trigger a recovery response to assess supply. However, recent reversal signals pose short-term risks, and the range of 1,110 – 1,115 points is now acting as a resistance area. Therefore, it is advisable for investors to exercise caution, closely monitor supply and demand, and reassess the market’s condition in the near future, it said.

Individual investor accounts exceed 7.76 million

According to the Việt Nam Securities Depository and Clearing Corporation (VSD), individual investor accounts in Việt Nam surpassed 7.76 million by the end of September 2023, representing approximately 8 per cent of the population. While this figure is relatively low compared to other Asian countries, it highlights the potential for further market expansion.

As Việt Nam’s economy continues to develop, with annual GDP growth averaging 6-7 per cent, the country is striving to achieve developed status by 2045. The private business sector is also thriving, leading to an increasing number of companies listing on the stock exchange, said VPS Securities Co.

Furthermore, favourable interest rate policies are playing a significant role in supporting stock market valuations in 2024. Sustaining low deposit interest rates for a considerable period is crucial not only to reduce lending rates but also to stimulate economic activities, it said.

With these promising factors in mind, the Vietnamese stock market stands at a pivotal moment, poised to transition into an emerging market. This transition is expected to attract more foreign indirect investment, both from active investment funds and index funds (ETFs). Increased capital inflow will provide listed businesses with resources to invest in production and business expansion, penetrate new markets, boost competitiveness and strengthen Việt Nam’s international market position. VNS