People sit on scooters as they wait in heavy traffic in Hanoi on November 6, 2024. (Photo by Nhac NGUYEN / AFP)
HANOI: Vietnam’s stock market is experiencing a recovery phase after a significant correction, but analysts caution that this rebound may not be sustainable and requires more time to become stable.
Following a prolonged period of volatility, the VN-Index is approaching a critical resistance level, raising the question of whether the market has enough momentum to break through or if it is merely undergoing a technical rebound before further corrections.
By the end of the last trading session of last week, the VN-Index gained 9.53 points, or 0.78%, closing at 1,228.1 points.
Meanwhile, the HNX-Index slightly declined by 0.24 points, or 0.1%, to 221.29 points compared to the previous week.
Market liquidity has not fully improved, with trading volumes on the Ho Chi Minh Stock Exchange (HoSE) dropping by approximately 17%, reflecting investor caution.
Furthermore, the market showed significant divergence, with recoveries concentrated in banking, retail, finance and particularly telecommunications sectors, while other sectors exhibited no clear signs of recovery.
Foreign investors maintained strong net-selling activity, with a total net value of nearly 5.2 trillion dong or about US$204.5mil on HoSE.
However, the scale of net selling gradually decreased and foreign investors even turned to net buying towards the end of the week.
Investors snapped up Ha Do Group Joint Stock Co and Techcombank, offering positive signals for foreign investment inflows.
Head of analysis at Saigon-Hanoi Securities, Phan Tan Nhat, noted that the VN-Index is in a recovery phase after a sharp decline.
He expects the index to test resistance levels around 1,230 and 1,250 points while finding support at around 1,220 points.
Regarding the VN30-Index, Nhat highlighted the need for stronger momentum and improved liquidity to surpass the 200-day moving average at around 1,290 points.
“The stock market has experienced a volatile year within a narrow range, pressured by strong foreign net-selling, exchange-rate fluctuations and capital outflows from the real estate sector.
“However, the market’s medium-term fundamentals are gradually improving, with many stocks and sectors at attractive valuations, presenting new investment opportunities,” Nhat observed.
He said he expects strong market divergence, with the VN-Index likely forming a floor around the 2018 peak of 1,200 points, and recommended investors maintain balanced portfolios.
He advised prioritising investments in fundamentally sound stocks with strong third-quarter results and promising growth prospects.
A report by Vietcombank Securities (VCBS) highlighted the potential for increased short-term profit-taking pressure.
Indicators suggest that the market may continue to experience fluctuations during its recovery.
Currently, the VN-Index is nearing its 20-day moving average with a short-term resistance at 1,240 points.
However, VCBS analysts noted that if liquidity and inflows improve this week, the VN-Index could target the 1,240 to 1,242 point range.
VCBS analysts advised short-term investors to exercise caution, consider profit-taking for stocks that have reached their targets and monitor for signs of weakening. — Viet Nam News/ANN
