VN-Index continued to have a turbulent trading session on November 19 when it dropped sharply and returned to the 1,200-point area. Negative signals became more overwhelming after yesterday's decline, although liquidity decreased slightly compared to the previous session.
The VN30 group of stocks was a major factor causing the general market correction. Large stock groups such as banks, securities, steel... continuously "fell downhill", causing panic in the market.
In addition to domestic selling pressure, foreign investors continued to dump heavily, causing the general market to fall sharply to nearly 1,200 points, in which a series of stocks such as VHM, FPT, HDB... were net sold for hundreds of billions of VND. The total net selling volume in the trading session on November 19 was 1,675 billion VND.
Since the beginning of the year, foreign investors have net sold more than VND88 trillion. The record net selling volume of foreign investors since the beginning of the year partly explains why the VN-Index has not been able to successfully break out of the 1,300-point threshold, even though the SP500, Dow Jones and Nikkei indices have continuously set new peaks in 2024.
The development of foreign capital flows is closely related to the story of interest rates and USD exchange rates. The pressure on the USD/VND exchange rate is large, along with the good growth momentum of technology stocks and large semiconductor manufacturers in the world, and the attractive interest rates from government bonds in developed countries, causing foreign capital flows to tend to withdraw from emerging and frontier stock markets, including Vietnam, to enjoy better yields. This is not a new story.
In the context of the recent significant correction of the VN-Index, the market valuation has also dropped significantly. Currently, the VN-Index is valued at a P/E of 12.9 times, significantly lower than the 5-year average of 17.2 times. This is the lowest P/E in the past 1 year and is often considered attractive for long-term investors.
Therefore, according to analysts, the market may have slow recovery sessions. However, in the next few sessions, it is necessary to closely monitor the actions of foreign investors and the developments of DXY and domestic exchange rates to determine the short-term movement trend.
In the current context, it is not impossible that the VN-Index will continue to correct to the support zone around 1,180 points in the coming sessions. The short-term trend of the VN-Index is declining below the nearest resistance zone of 1,230 points, stronger resistance than the highest price zone in 2023 around 1,250 points. The strong support zone of 1,200-1,210 points, strong psychological support and the highest price zone in 2018, as well as the trend line connecting the lowest price zones from April 2024 and August 2024 to present.
The probing purchase at 1,208 points has not brought favorable results, so we need to be more cautious in new buying positions and limit the average purchase price to the maximum. Temporarily prioritize the observation position, waiting for VN-Index to test the support level of 1,180 points.
Investors should improve risk management, focus on stocks with good fundamentals and positive business prospects, closely follow market developments to determine the appropriate disbursement time when signs of balance are clearer and stock valuations are attractive.
