The Vietnamese stock market logged the second straight weekly fall last week, with the VN-Index breaking below the key psychological level of 1,200 points. The bearish trend is expected to extend this week, said experts. 

On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index only gained on September 20 and lost for the rest of last week. The index closed the week at 1,193.05 points. 

Similarly, the HNX-Index on the northern bourse, the Hà Nội Stock Exchange (HNX), experienced the same trend and was last traded at 243.15 points. 

For the week, both benchmark indices posted a weekly loss, with the former down 2.8 per cent and the latter down 3.8 per cent. 

Liquidity on the two main exchanges also declined over the previous session. In particular, on HoSE, liquidity slid 11.1 per cent in value to VNĐ118.5 trillion (US$4.86 billion), while it decreased 5.5 per cent to VNĐ11.66 trillion on the northern exchange. 

Meanwhile, foreign investors net sold strongly for the fourth consecutive week, focusing on stocks in steel, banking, financial services, and securities industries. They net sold a total of nearly VNĐ1.7 trillion on both main exchanges. 

Đinh Quang Hinh, Head of the Macro and Market Strategy Department of VNDirect Securities Company, said that the market would be able to stabilise and recover soon, so investors should consider increasing the proportion of stocks ahead of the third quarter business results reporting season.

The country’s stock market was under selling pressure in the last trading sessions, following less positive developments in the global stock markets, as well as exchange rate issues in the domestic market. 

The State Bank of Việt Nam (SBV) has issued treasury bills to absorb excess liquidity from the banking system to stabilise the exchange rate, limiting foreign exchange speculation. However, many investors took negative views and were concerned that this was a tightening move by the central bank.

"In fact, I think that this step by the SBV is not a step to tighten or reverse the current loosening policy, but is only a temporary, short-term solution to absorb the surplus liquidity to help limit exchange rate speculation,” Hinh said. 

“The move also aims to neutralise the State Treasury's previous purchase of foreign currency and injection of đồng into the market. The central bank itself said that it would continue to carry out solutions to maintain liquidity for the banking system to support the economy. Therefore, I think the market can soon reconsider the recent move of issuing T-bills by the SBV.”

Moreover, the market sentiment may stabilise again after rumours related to HoSE’s leadership and the adjustment of the margin portfolio of a top securities company are clarified, Hinh said, adding that the third quarter business results reporting season is approaching with expectations of more improvements.

The positive performance is expected to support the market in the next few weeks.  

According to Hinh, investors can take advantage of the corrections to restructure their investment portfolio and increase the proportion of stocks when the VN-Index reaches the support zone of 1,170 - 1,180 points. However, he suggested prioritising businesses whose business results will change positively in the last two quarters of the year such as exports (seafood, wooden furniture, chemicals), retail and public investment (construction and construction materials).

Meanwhile, Vietcap Securities JSC said that the VN-Index was likely to continue rebounding to retest the resistance area around 1,200 points.

If the demand force is strong enough to help the index close above this level, the market will have opportunities to return to upward momentum soon, according to the company. 

On the contrary, if the buying force is weak and is overweighed by the selling force at the 1,200 point-level, the index will continue to decline to test the support zone of around 1,170 points again. If this support is broken, the benchmark will retreat to the lower support area of 1,120-1,140 points. — VNS