VN-Index maintained its recovery momentum for the second consecutive week after falling deeply below the 1,600 point mark before, but the upward momentum still lacked spreading. The market is still strongly differentiated, in which the index increased mainly thanks to some large-cap stocks, while most stocks still under pressure to sell.
Market-wide liquidity remained at an average level of 20 weeks, with an average trading value of nearly 24,900 billion VND/session. Cash flow in general has not improved significantly, reflecting the cautious sentiment of investors. Foreign investors continued to net sell more than 1,700 billion VND on HoSE.
The April scenario is divided by experts into two directions with equivalent probabilities. In a positive scenario (50%), if Vietnam receives favorable information related to the upgrade progress from FTSE and foreign capital returns to net buying, VN-Index may decisively break out of MA200 and head up to the 1,750 point zone.
Conversely, in a cautious scenario (50%), if geopolitical tensions escalate and oil prices rise sharply, the market may return to test the 1.520 point zone. If this level is broken, the market will confirm a long-term downward trend.
Mr. Huynh Anh Huy, CFA, Kafi Securities Industry Analysis Director, said that VN-Index is currently showing typical characteristics of a wide-band accumulation phase, when the index mainly fluctuates around the 1,600–1,700 point range. Along with that, market liquidity tends to decline, reflecting the cautious psychology of investors as well as the tug-of-war between buyers and sellers. This development is similar to previous accumulation phases, when the market needed time to absorb supply and consolidate a new price level.
In the context that no strong enough supporting factors have appeared to create a breakthrough, it is highly likely that VN-Index will continue to maintain a sideways state in the short term. It is expected that in the next 1-2 weeks, the index will still fluctuate mainly in the 1,600-1,700 point area, with alternating fluctuations to rebalance supply and demand before forming a clearer trend.
Pinetree Securities Company also expressed its view that the technical recovery of VN-Index is likely to have ended last week, and the market may face more challenges next week. Geopolitical risks continue to be an unpredictable variable, especially after the US President's announcement of the possibility of increasing military actions against Iran, making the risk of escalating tensions still present in the short term.
In a negative scenario, according to analysts at Pinetree Securities Company, if these risks increase, VN-Index may return to test the bottom zone formed on March 24th around the 1,591 point mark. Notably, market developments are still mainly dominated by global macroeconomic factors, while internal issues such as liquidity, interest rates or energy security have not been fully reflected in the price.
Experts believe that when uncertainties are relieved, for example, geopolitical tensions in the Middle East cool down, investor confidence will soon improve, from which investment cash flow will return.
Especially in the context of many important events that could have a positive impact on the market such as FTSE Russell's market upgrade results to be announced on April 7, creating many expectations in the medium and long term for new capital flows into the market to promote the valuation level.
In the latest report, analysts from SSI Securities Joint Stock Company said that with the reforms being implemented, Vietnam has now met 17/18 MSCI criteria.
The final barrier, which is the liberalization of the foreign exchange market (FX), is being considered, although experience from countries like India or Indonesia shows that this is not an absolute barrier to upgrade.
SSI estimates that if upgraded to emerging markets, Vietnam could attract about 1.67 billion USD from ETF funds. This capital flow will be disbursed according to a roadmap, divided into 3-5 phases, helping the market absorb stably and limit fluctuations.
