The Vietnamese stock market witnessed a strong performance with an improvement in liquidity in the first trading week of 2023. The positive news was attributed to the bullish trend, according to experts.

The smooth beginning raises hope that the market will run more actively, creating disbursement opportunities for short-, medium-, and long-term investors.

According to experts from VNDirect Securities Corporation, the market focused on several internal and external factors in the first week of 2023, including China officially announcing the opening of international flight routes on January 8; phase 2 of the East North-South Expressway Project being officially launched on January 1; and draft amendments to Decree 65 amending and supplementing several articles of Decree 153 on the offering and trading of a private placement of corporate bonds in the domestic and international markets being submitted to the Ministry of Justice.

Indices all posted outstanding performances. Of which, the VN-Index on the Ho Chi Minh Stock Exchange (HoSE) soared by 4.4 per cent to 1,051.4 points last week, while the HNX-Index on the Ha Noi Stock Exchange (HNX) increased by 2.6 per cent to 210.6 points, and the UpCOM index jumped by 1.5 per cent to 72.7 points.

The market’s liquidity improved, with the average trading value of the three exchanges rising 9.3 per cent to over VND11.7 trillion (US$499.5 million). Last week, foreign investors continued to be net buyers due to a stable macro-economic backdrop and appealing stock valuations.

Specifically, at the beginning of the new year, foreign investors net bought more than VND1.6 trillion on HOSE, VND87 billion on HNX, and VND2 billion on UpCOM.

VNDirect said that after the positive week, the market’s benchmark VN-Index is heading to a strong resistance area of around 1,070 points.

Although there have been some positive macro signals, such as a cooling of exchange rates and a slowdown in rate hikes, cash flows are unlikely to improve dramatically as the Lunar New Year (Tet) is coming near.

Traditionally, investors tend to lower the margin ratio to reduce interest expenses ahead of the long holidays. Therefore, it is difficult to expect the market's momentum to be maintained in the weeks leading up to Tet.

Therefore, short-term investors should consider reducing their holdings of stocks when the market enters strong resistance areas around 1,070 points and buying them back once it corrects.

Long-term investors, on the other hand, can continue to hold stocks and wait for stock indices to break out when cash flows improve post-Tet holidays.

Meanwhile, Saigon-Hanoi Securities JSC (SHS) said that the market had sent many positive signals at the end of 2022 and the beginning of 2023, given the net buying streak from foreign investors and positive movements of some pillar stocks, including bank stocks.

At the current state, the VN-Index is expected to escape the downtrend shortly. Previously, the market fell for four consecutive weeks.

Even if the VN-Index exits the bearish trend, the market is unlikely to enter the bullish phase immediately. Instead, it will move in recovery waves with narrowing ranges to accumulate more before the uptrend occurs. Therefore, at the moment, investors can participate in the market with a short-term position, as SHS recommended.

From a medium- and long-term perspective, SHS said that it is clear that after a year of trading in the downtrend, the stock price levels have dropped sharply and become more attractive, even though the market still faces many challenges this year.

Many obstacles exist, such as rising interest rates, diminishing cheap money sources, and the gloomy global economy.

The discounted stock prices to the current levels will open up new attractive medium- and long-term investment opportunities. — VNS