Market analysts forecast that selling pressure will still increase during the decline of the market this week. Investor sentiment will remain easily exposed under the movements of interest rates, exchange rates and the bond market.

The VN-Index lost the 1,000-point landmark on Friday. It decreased 2.22 per cent to close at 997.15 points.

The index had declined 2.94 per cent last week.

Vietnam Foreign Trade Bank Securities Company Limited (VCBS) said that, following the European Central Bank (ECB) and the US Federal Reserve (Fed), on November 3, the Bank of England (BOE) announced its decision to raise interest rates by 0.75 percentage points to 3 per cent. This is a very strong increase in a short period of time.

This implies that the State Bank of Viet Nam will likely continue to raise the operating interest rate along with the exchange rate increase to ensure the balance between the two countries.

This trend is not only observed in Viet Nam but also in many other emerging economies. Rapidly and sharply rising interest rates for both lending and deposit rates in many countries in a short period of time have put pressure on net capital outflows in asset markets in emerging markets and led to risks in assets valuation, VCBS said.

Saigon - Hanoi Securities Joint Stock Company (SHS) said that the Vietnamese stock market is under selling pressure equivalent to the time of the COVID-19 pandemic in March 2020, together with macroeconomic factors related to interest rates, exchange rates, and the bond market, making it difficult to determine whether the market has formed a long-term bottom or not.

According to Bao Viet Securities Co (BVSC), the market may face downward pressure this week. It is recommended for investors to secure profit and reduce stock exposure. Investors should temporarily stop opening long positions. Buying should only be considered when VN-Index dips back to the 978-988-point and 930-950-point zones.

“It is expected that VN-Index will return to test supply and demand at the support level of around 980 points. If the cash flow continues to support, the market will have a chance to recover. Therefore, investors need to slow down and observe the movement of the supporting cash flow to re-evaluate the market state,” said BVSC.

“The market fell deeply on Friday but then recovered and formed a Hammer candlestick pattern on the charts of VN-Index and VN30-Index, thanks to an effort to absorb supply at low prices. However, this support signal needs to be confirmed in the next session, whereby the market will move back at the beginning of the next session to test supply and demand,” it said.

Construction materials stocks fell the most in the past week with a decrease of 8.5 per cent in market capitalisation. The main reason for this came from the sharp drop in the steel industry with representatives of losers such as Nam Kim Group (NKG) down 17.5 per cent, Hoa Phat Group (HPG) down 12.8 per cent, Hoa Sen Group (HSG) down 9.4 per cent. Besides, chemical stocks also fell sharply, specifically PetroVietnam Ca Mau Fertiliser JSC (DCM) decreased by 8.9 per cent, Duc Giang Chemical (DGC) decreased by 8.3 per cent, and Phu My Fertiliser (DPM) lost 8.1 per cent.

The consumer service industry also dropped strongly with 8.5 per cent of market capitalisation, mainly due to the strong drop in retail stocks such as Mobile World Group (MWG) down 13.4 per cent, Digiworld (DGW) and FPT Retail (FRT) both down 11.3 per cent.

Real estate stocks also performed poorly. Development Investment Construction JSC (DIG) was down 12.6 per cent, Kinh Bac Corporation (KBC) down 7.3 per cent, Dat Xanh Group (DXG) down 6.3 per cent. Insurance stocks like Bao Minh Insurance Corporation (BMI) down 11 per cent, Bao Viet Holdings (BVH) down 4.8 per cent and PVI Insurance Corporation (PVI) down 2.5 per cent.

The rest of the sectors all decreased such as information technology down 3.9 per cent of market capitalisation, industry down 3.1 per cent, oil and gas down 2.6 per cent, pharmaceutical and medical down 2.5 per cent, consumer goods down 2.5 per cent, banking and community utilities both decreased by 0.5 per cent. — VNS