VN-Index is moving into a recovery phase after 4 consecutive weeks of decline, with a strong resistance zone around 1,770-1,800 points. Recent recovery developments of the stock market have shown positive signals but are not enough to confirm that it has created a medium-term bottom.
A noteworthy point is that market liquidity has decreased in the recovery streak. The average trading value on HOSE is only about 17,500 billion VND/session. This shows that the market is increasing but cash flow is not increasing correspondingly, a classic warning sign of the bull trap. Besides, the upward momentum also heavily depends on a few pillar codes, while the actual breadth outside the large capitalization group is still limited.
Stepping into August, the stock market is likely to shift from the stage of reacting to business results to differentiation and re-evaluating the prospects of each business. When most of the Q2 and semi-annual financial statements have been announced, cash flow tends to focus on stocks with substantial growth, positive second half-year prospects and reasonable valuation. Conversely, stocks that have increased sharply as expected but with disproportionate results may be under adjustment pressure.
After the period of announcing business results and policy information at the beginning of the month, the market may enter an information vacuum, making cash flow more cautious and short-term developments heavily dependent on liquidity and trading sentiment.
Dr. Nguyen Duy Phuong, Director of Financial Investment Analysis Division of DG Capital, said that the most decisive factor is still cash flow. The market may receive a lot of positive information, but if cash flow is not ready to return, the possibility of breakthrough will be limited. Conversely, when liquidity improves and cash flow spreads wider, supporting information will be very effective very quickly.
The market has now returned to a relatively attractive valuation zone for medium-term goals, but short-term developments are not clear enough to confirm whether VN-Index has formed a bottom or is just technically recovering. Therefore, investors can disburse portions in adjustment phases, but should not increase the proportion too quickly.
If the banking group - the main driving force of the current recovery - continues to weaken, we should temporarily wait for the market to confirm the trend or for deeper discounts to appear before buying more. This approach helps limit early bottom-fishing risks, while optimizing positions and cost of goods sold," Dr. Phuong said.
Many securities companies also maintain an optimistic view of market prospects in the second half of the year. After a period of strong adjustment, the valuation level is more attractive, the corporate profit base continues to improve and many supporting factors are gradually forming. Therefore, short-term fluctuations should be seen as opportunities to restructure portfolios and accumulate quality stocks, instead of being too pessimistic about the general trend of the market.
