A man watching the market's movements on his laptop. —Photo thanhnien.vn

After the second quarter business result reporting season passed, the Vietnamese stock market is entering a quiet week as there is no key data to be released.

However, analysts say the market is supported for the longer term by the positive economic outlook in the second half.

On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index closed last week at 1,232.2 points. Despite experiencing strong fluctuations, the index still managed to set a weekly gain of 0.5 per cent.

The HNX-Index on the Hà Nội Stock Exchange (HNX) last traded at 254.3 points and gained 1.2 per cent for the week.

The liquidity decreased slightly last week, with the average trading value of the whole market reaching over VNĐ26.3 trillion (US$1.1 billion), down 1 per cent compared to the previous week.

Foreign investors net sold VNĐ733 billion and VNĐ50 billion on HOSE and HNX, respectively, while net bought a huge amount of VNĐ990 billion on UPCOM.

As a result, they net bought VNĐ209 billion on all three exchanges.

Đinh Quang Hinh, Head of Macroeconomics and Market Strategy Department of VNDirect Securities Corporation, said that the market will continue to struggle at the strong resistance area of 1,240-1,250 points this week.

Given the recent long rallies and the lack of supporting information this week, Hinh said that the market needs a break to accumulate and establish a new price level.

Therefore, it is unlikely to establish a clear trend in the next few weeks. As the market benchmark hovers at high levels, speculative cash flows may continuously circulate between groups of stocks, forming short-term uptrends or corrections.

However, for the longer term, the analysis team from Mirae Asset Securities (Vietnam) said that the domestic stock market is supported by the expectation that the economic results would improve in the second half of the year.

Mirae Asset expects the growth of most industries to be positive in the second half thanks to lower lending rates and boosted credit growth, recoveries of exports and domestic consumption, public investment projects, and the Government’s supportive policies.

Investor sentiment is optimistic, which is reflected in the number of new accounts. Specifically, the number of new accounts reached more than 100,000 per month from May to July.

Meanwhile, SSI Securities Corporation (SSI) said that the market's attention is shifting to the FTSE Russell review in September.

The organisation’s moves towards Việt Nam will be the clearest signal for the stock market's prospect of upgrading to an emerging market.

The Vietnamese stock market has been on FTSE Russell's watch list since 2018, and in its review in March, the organisation raised concerns related to the lack of clarity on the timing of market reform and warned of reconsidering Việt Nam’s membership in the watch list in the next review period.

However, at the July Dialogue on Macroeconomics and the Stock Market, taking place at the end of July, the Chairwoman of the State Securities Commission (SSC) Vũ Thị Chân Phương said that the meeting between the SSC and rating agencies in August is expected to be a key factor in helping solve the problem, demonstrating the Government's strong determination to upgrade the country’s stock market to the FTSE's emerging market by 2024 or 2025.

The securities firm also said that the profit picture in the second quarter has not really accelerated amid macroeconomic challenges, but declines have narrowed significantly and slowed down for three consecutive quarters with the possibility of hitting bottoms, showing that the Government's supportive policies are gradually reflecting in the recovery efforts of businesses.

SSI believes that the recovery of profit growth in the last two quarters of the year, as well as supportive government policies, is a solid foundation for the stock market to maintain a stable uptrend in the medium and long term.

However, short-term correction risks still exist, and the market may have stronger fluctuations in the near future. — VNS