Investors follow market movements at MBS Securities. — VNA/VNS Photo

After a series of previous gains, the stock market experienced a significant correction last week.

In Monday's trading session, the market was awash in red, and subsequent sessions saw the VN-Index fail to break through the 1,300-point mark.

This led to two consecutive declines by the end of the week, resulting in a total decrease of 20.32 points for the VN-Index.

Experts advise caution during this market correction phase; however, they also note that the VN-Index's support level of 1,250 points could attract bottom-fishing, providing a foundation for a medium-term recovery.

On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index closed the week at 1,270.6 points, while the HNX-Index on the Hà Nội Stock Exchange (HNX) ended at 232.7 points.

Both indices registered weekly declines, with the VN-Index dropping by 1.6 per cent and the HNX-Index by 1.3 per cent.

Liquidity improved on both exchanges compared to the previous week. Additionally, foreign investors were net buyers on the HoSE, with net inflows amounting to VNĐ446 billion.

They mainly focused on buying shares of TCB, FPT, MWG and PNJ. Conversely, foreign investors continued their net selling trend on the HNX, offloading VNĐ295 billion worth of shares, particularly in BVS, IDC and SHS.

Analysing market trends, Phan Tấn Nhật, Head of Analysis at Saigon-Hanoi Securities (SHS), noted that after the third quarter ended, the VN-Index surpassed its highest level of 2023 at around 1,250 points and moved into the first week of the fourth quarter.

The index continued to rally towards the strong resistance zone at 1,300 points. However, recent trading sessions have seen a sudden increase in supply pressure on many stocks, indicating short-term distribution pressure at this resistance level.

In the short term, Nhật stated that the VN-Index is transitioning into a correction phase, facing resistance at 1,290 points. In the upcoming week, the index is expected to consolidate within the 1,280-1,300 point range.

In the medium term, the VN-Index is anticipated to break through the 1,300-point mark and target higher levels of 1,320 points. The 1,300-1,320 point range serves as a strong resistance, representing the peaks of June-August 2022 and the early months of 2024.

Regarding the market’s fundamentals, Nhật pointed out that the VN-Index can only surpass these strong resistance levels with positive macroeconomic information and significant growth in the earnings reports of listed companies.

Đinh Quang Hinh, Head of Macroeconomics and Market Strategy at VNDIRECT Securities, shared that the VN-Index faced significant profit-taking pressure when approaching the 1,300-point resistance zone, leading to a downturn last week.

According to Hinh, the market correction was also influenced by the rebound of the USD/VNĐ exchange rate in the interbank market to 24,750 and the overnight interbank interest rate exceeding 4 per cent.

For the upcoming week, Hinh forecasted that the VN-Index might test the support area around 1,250 points (+/- 10 points). He expects bottom-fishing activities to emerge, as it is unlikely that the VN-Index will experience a deeper correction at this level.

In the medium term, Hinh maintains a positive outlook on Việt Nam’s stock market, citing several supporting factors. These include room for monetary policy easing, increased money supply in the year-end months, positive earnings growth prospects for listed companies in the third and fourth quarters, driven by Việt Nam's robust economic growth and a low comparison base in the second half of 2023.

Based on this outlook, Hinh recommended that investors consider resuming disbursements, prioritising stocks with positive business prospects and attractive valuations in sectors such as banking, industrial real estate, export-oriented industries (textiles and fisheries), and oil and gas.— VNS