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Weak liquidity hampers stock market growth
The stock market continued to experience a quiet trading week, as investors remained cautious ahead of key macro-economic events.
A stock market investor analysing the market. — Photo baotintuc.vn
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One major factor influencing this sentiment is the upcoming US Federal Reserve (Fed) interest rate meeting, scheduled for mid week, where the first rate cut of the year is expected.The market is also anticipating the State Bank of Việt Nam's response following any Fed adjustment.
In addition, Typhoon Yagi, the most significant storm in three decades, severely disrupted business activities in northern Việt Nam.
Over the past week, the VN-Index continued its downward trend with low liquidity. The worst day was last Tuesday (September 10), when the VN-Index dropped by 12.5 points, followed by three sessions of sideways trading within a narrow range.
By the end of trading on Friday, the VN-Index on the Hồ Chí Minh Stock Exchange (HoSE) closed at 1,251.71 points, while the HNX-Index on the Hà Nội Stock Exchange dropped to 232.42 points.
For the week, both indices posted losses, with the VN-Index down 1.75 per cent and the HNX-Index falling by 0.95 per cent.
Liquidity on both exchanges was higher compared to the post-holiday trading week (due to a full five trading sessions instead of three), but the average transaction value per session across all three exchanges dropped by 21.29 per cent. The value of matched orders on HoSE during the last two sessions of the week fell below VNĐ10 trillion, marking the lowest level since 30 October 2023.
Foreign investors continued their net selling trend, with VNĐ1.12 trillion in net sales on HoSE, mainly targeting MSN (VNĐ316.83 billion), HPG (VNĐ309.95 billion), and VPB (VNĐ249.19 billion).
However, head of macro and market strategy at VNDIRECT Securities, Đinh Quang Hinh, remains optimistic about the outlook of Việt Nam's stock market in the remainder of the year.
He sees the VN-Index surpassing the 1,300-point mark as feasible, supported by several factors. The Fed will probably cut interest rates by 0.75 percentage points by year-end, while lower inflation and exchange rate pressures provide room for the State Bank of Việt Nam to focus on economic growth, increase money supply and maintain low interest rates. Additionally, the earnings of listed companies continue to improve and progress is expected on market upgrades.
Hinh also observed that historically, market peaks occur during periods of active trading, while market bottoms tend to form when liquidity is low.
Thus, he believes that the VN-Index is currently accumulating for a year-end rally, and investors should take advantage of this period to increase their stock holdings around the 1,250-point support level. He suggests focusing on sectors with strong growth potential, such as banking, securities, export-related industries (including textiles, seafood, and wood) and industrial real estate.
According to SHS, in the short term, the VN-Index is showing a negative trend, trading below its 20-day moving average, which is in the range of 1,265-1,270 points.
The VN-Index continues to face pressure as it tests the 1,250-point level, which is both the highest point of 2023 and a support range for medium-term accumulation. This level is considered reasonable given the market's growth prospects, with expectations of gradual market differentiation, potentially opening up opportunities for reasonable accumulation based on corporate growth prospects and Q3 2024 earnings results. However, current trading activity has not yet shown a significant return of short-term capital flows, according to SHS.
SHS expects that this week, the VN-Index may continue to face downward pressure towards the 1,250-point level, with a potential recovery to test the nearest resistance around 1,265 points. For short-term trading, investors should wait for the VN-Index to break out of the corrective trend that has persisted since August 29.
Bizhub
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