Investors at HCM Stock Exchange in HCM City. Given the expectations of a potential market recovery, it is advisable for investors to exercise caution and refrain from hastily selling off stocks that have retraced back to the support zone. — VNA/VNS Photo

As the new trading session begins this week, there may be further profit-taking pressure, potentially pushing the market to step back, but it is anticipated that the market will find support within the 1,200 - 1,210 point range and rebound to test supply.

The market benchmark VN-Index on the Hồ Chí Minh Stock Exchange (HoSE) lost 1.25 per cent to end Friday at 1,212.00 points.

The VN-Index experienced a rapid retreat after reaching the 1,240 point level, indicating a potential resistance zone. This retreat was accompanied by a significant increase in liquidity compared to the previous session, suggesting the activation of profit-taking activities as the market witnessed an upward movement. This profit-taking supply exerted pressure on the market, leading to the quick decline, according to Việt Dragon Securities Co.

Looking ahead, it is anticipated that profit-taking pressure may continue to influence the market, causing it to step back in the upcoming trading sessions. However, it is important to note that the market is expected to find support within the 1,200 - 1,210 point range, which has historically acted as a crucial level, it said.

It forecasts that the market may consolidate within this support zone and potentially initiate a recovery phase. This recovery would involve testing the supply and aiming to regain lost ground. It is important for investors to closely monitor the movements of cash flow, as it will provide valuable insights into the market's supportive dynamics and overall sentiment.

Given the expectations of a potential market recovery, it is advisable for investors to exercise caution and refrain from hastily selling off stocks that have retraced back to the support zone. Instead, it may be more prudent to wait for signs of a market rebound and stability before considering any significant restructuring of investment portfolios.

Return of capital flow

According to SSI Securities Inc, it is highly likely that the economic recovery will become more evident in the second half of 2024, driven by increased exports due to global interest rate reductions and gradually returning consumer confidence.

Domestically, the focus will remain on the recovery of the real estate sector, as real estate companies need to promptly address project-related legal issues and the current high mortgage lending rates. If liquidity in the real estate market and corporate bond market does not recover quickly, consumer confidence may be affected.

In terms of cash flow, record-low interest rates will serve as the main driver of growth, especially for individual investors. Bank deposits are still increasing as other investment channels are relatively limited (gold prices have significantly risen, while real estate and corporate bonds require more time to recover). This capital flow could return to the stock market in various stages of 2024.

"With individual investors accounting for up to 92.2 per cent of the average daily trading volume in the entire market in 2023, we predict that the VN-Index will experience significant jumps in 2024 due to this capital flow," said SSI.

Although foreign investors experienced net selling in 2023, this trend is expected to reverse in 2024 due to the US Federal Reserve's gradual interest rate reduction and the market's opportunity for the Vietnamese stock market to be upgraded by FTSE Russell in 2024-2025. The long-awaited upgrade to an emerging market is a significant event for investors.

"While foreign capital inflows may not immediately recover, at least we expect that the selling pressure from foreign investors will not be as strong as in the previous year," SSI added.

SSI Research believes that the fair value for the VN-Index at the end of 2024 is 1,300 points, although there may be moments during the year when the market exceeds this threshold. Regarding investment themes for the year, profit growth will be the main driver for stocks to outperform this year. Additionally, in the context of record-low interest rates, high dividend yields are becoming an attractive factor. — VNS