Market likely to return to 1,000 point-level on positive signals

Monday, Nov 28, 2022 03:24

The Ho Chi Minh Stock Exchange (HoSE) headquarters in HCM City. — Photo courtesy of the exchange

The Vietnamese stock market struggled last week as the benchmark VN-Index fluctuated in a large range. Experts said that there are more positive signals supporting the index to recover to the 1,000 point-level.

On the Ho Chi Minh Stock Exchange (HoSE), the VN-Index ended last week with a strong gain of 23.75 points, or 2.51 per cent, to 971.46 points, while the HNX-Index on the Ha Noi Stock Exchange (HNX) rose by 5.55 points, or 2.9 per cent, to 196.77 points.

For the week, however, the VN-Index only added up 0.22 per cent, whereas the HNX-Index gained over 3 per cent.

The VN-Index dropped for the first three consecutive sessions of the week, but rebounded sharply at the end of last week.

Large stocks in banking, securities, and real estate industries were the main driving force for the benchmark’s recovery. The gaining session at the end of the week helped improve investors' sentiment.

The market’s liquidity decreased by 13.7 per cent over the previous week with the average trading value on all three exchanges reaching over VND11.45 trillion a session (US$462.4 million).

Meanwhile, foreign investors continued to be positive contributors, cushioning the market’s bearish trend in the past week as they were net buyers of VND1.6 trillion on HOSE, but down 67.9 per cent compared to the previous week. This also marked their third consecutive week of net buying.

With the developments in the market, Saigon - Hanoi Securities JSC (SHS) said that there were positive signals showing that the market is gradually stabilising and tends to accumulate when the VN-Index successfully reverses the downtrend and continues to fluctuate in a narrow range. It is likely that the market benchmark will break the long-term downtrend in the short term and move into a more active accumulation phase.

On one hand, in international markets, the US Federal Reserve signalled that it would soon slow down the interest rate hike, while the dollar index has continuously gone down recently and has reached a range of 105-106 points, helping ease the pressure on the domestic exchange rate.

On the other hand, in the domestic market, Vietcombank announced that it will reduce lending interest rates up to 1 per cent for customers. And the government is considering solutions to support the real estate market and corporate bonds, such as loosening credit restrictions and, if necessary, amending Decree 65 on corporate bond issuance.

However, the market is still in a downtrend, so shares are likely to witness strong declines and recoveries before stabilising again and entering a new bullish phase. Therefore, the company recommends that investors should not participate in the market with a large proportion during the period and avoid panic buying in rising sessions.

For long-term portfolios, investors should be patient and continue to hold the current proportion of stocks in their investment portfolios because the market has begun to send out positive recovery signals. If buying new stocks, investors should choose stocks that have good fundamentals and growth potential, or are leading stocks in the industry, and tend to recover stronger than the general market.

Similarly, VCB Securities (VCBS) also recommends investors to limit buying in stocks if the market increased sharply, keep the proportion of shares at about 30 per cent of the account to be able to manage risks if the market suddenly face selling pressure.

From a technical perspective, VCBS believes that 970 - 980 point area is still a strong resistance of the market in the short term. If the active buying liquidity is maintained well, helping the general index overcome resistance, the index will be able to extend to 1,000 - 1,020 points. — VNS

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