Market expected to bounce back this week

VIETNAM, June 16 - HÀ NỘI — The domestic stock market struggled last week as the VN-Index corrected strongly after returning to the threshold of 1,300 points. However, experts believe the fall was not sufficient to trigger a short-term decrease and the index is likely to rebound this week. 

On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index closed last week at 1,279.9 points and the HNX-Index on the Hà Nội Stock Exchange (HNX) was last traded at 243.9 points. 

Both benchmark indices recorded a weekly fall, with the former down 0.6 per cent and the latter dropping 0.4 per cent. 

Last week, the liquidity rose by 7.7 per cent from the previous week to over VNĐ24.5 trillion (US$963.1 million) per session. 

Foreign investors extended their net selling momentum, reaching a total of more than VNĐ5.7 trillion across the whole market. Specifically, they net sold VNĐ5.5 trillion on HOSE, while net purchasing VNĐ48.9 billion on HNX.

Đinh Quang Hinh, Head of the Macro and Market Strategy Department of VNDirect Securities Corporation, said that the market’s movement in the last trading session surprised many investors. 

Despite earlier positive news regarding lower-than-expected inflation data in the US, declining government bond yields and new all-time highs in the US stock market, the market experienced a downturn.

This decline may have been driven by investors' profit-taking actions, as several stocks had witnessed significant gains of 20-30 per cent in a short period, particularly in the ports, maritime transportation and technology sectors.

The market was also influenced by consecutive net selling activities by foreign investors and investor concerns about the impact of the Euro 2024 finals on the declining sentiment in the stock market.

According to Hinh, the sharp decline in the market last Friday did not alter the medium-term upward trend, particularly given the stable and improving domestic macroeconomic conditions. This includes positive developments such as growth in exports and imports, stable exchange rates and a stable gold market.

Analysts from Vietnam Construction Securities JSC (CSI) said that the decline caused the VN-Index to close the week with a loss of positive momentum established in the previous week. Currently, there is strong selling pressure following the sharp drop. 

However, CSI believes that the reversal signal has not been clearly confirmed and there remains a possibility of a short-term decline in the VN-Index over the upcoming trading sessions, followed by a potential rebound.

Similarly, Mirae Asset Securities (Vietnam) stated that the force that pushed the VN-Index to return to 1,300 points last week after several years was not strong enough, as the index just briefly surpassed the mark, raising concerns among investors and prompting profit-taking at this level.

Nevertheless, the significant decline towards the end of the week did not immediately shift the VN-Index into a short-term downward trend, the securities firm noted. 

Investors should take note of the support range of 1,270-1,275 points to assess the potential for further declines. If the index manages to reclaim 1,285 points, it may indicate a resumption of the upward trend.

In fact, the macroeconomic factors at both domestic and international levels are still quite positive, according to Mirae Vietnam.

Given the significant rise in global stock markets, analyses from many securities companies also suggest that the recent downward movement in the Vietnamese stock market was primarily driven by profit-taking activities. —  VNS