After strong gains, the stock market is returning to the "green shell, red core" trading status that has been common recently. Although the green color is still being maintained, however, the fluctuation around 1,800 points is showing that profit-taking supply is starting to increase after a rapid recovery.
The question that investors are currently interested in is whether with liquidity maintained at a low level, is the current price range sufficient to form a short-term bottom? Or are the recent increases just a technical recovery before the market continues to face unpredictable fluctuations.
And to answer those questions, the market needs more confirmation from many factors, especially liquidity and the spread of cash flow.
The most noteworthy point in the current developments is that liquidity has not improved commensurate with the upward momentum of VN-Index. The current recovery momentum mostly appears in the context that the market does not have more negative information, instead of being driven by a new and strong enough driving force. The story of upgrading is creating more expectations for the market, but it is not enough to clearly draw large cash flow back.
For liquidity to truly improve sustainably, the market needs to converge two important conditions. First of all, pressure on the domestic capital market cools down, especially when the general level of interest rates remains low or tends to decrease. At that time, the relative attractiveness of the stock channel compared to new deposits is improved, creating conditions for domestic cash flow to increase.
Although the most stressful period of the interest rate level has passed, the support space from interest rates is not strong enough to promote cash flow back to the stock market on a large scale in the last months of the year. In fact, deposit interest rates for many new terms have only slowed down and have not shown signs of cooling down in the short term, showing that the pressure to mobilize capital from the banking system has not been completely relieved.
For the stock market, interest rate trends are important not only for cash flow, but also directly affect valuation and business profit prospects.
In a positive direction, cooling down lending rates will help reduce financial costs for businesses. However, cooling down lending rates does not mean that the general level of deposit interest rates will soon return to the low level of the previous period. When deposit interest rates - especially for short terms - are still maintained at a high level, the relative attractiveness of the deposit channel has not decreased significantly, causing cash flow to shift to stocks to be more cautious and selective than massive.
Dr. Nguyen Duy Phuong - Senior Director of Financial Investment Analysis Division of DG Capital - said that the interest rate problem in the last months of the year is not entirely one-sided. While the policy orientation is to continue reducing lending interest rates, the credit demand of the economy is still large, and the rate of capital mobilization has not kept up. This gap may put pressure on the system's liquidity when banks accelerate disbursement for the year-end business season to complete business plans, while the rate of capital mobilization is slower than credit.
If input interest rates are difficult to reduce, even increase again, the room to reduce lending interest rates will be narrowed and cash flow into the stock market will also face a new "test"," Dr. Phuong assessed.
In the medium term, the market will also receive support from economic growth, fiscal policy, business profit prospects and expectations of increased foreign capital flows as the market upgrade process enters a new phase.
To create broad momentum, the market still needs more time to accumulate and wait for signs of clear cooling deposit interest rates, thereby consolidating a more sustainable growth trend in the medium term.
