The stock market last week also had many impressive acceleration sessions before high selling pressure pushed the index down sharply in the weekend session on August 22. VN-Index decreased by 42.53 points (-2.52%) to 1,645.47 points at the end of the week, but still increased by 15 points compared to the previous week. Trading liquidity last week continued to be raised to a new level with an average value of about VND45,400 billion/session.
Experts still consider this market correction as necessary when it has been "hot" for a long time. The concentrated cash flow to hold the index has caused investors holding small and medium-sized stocks to have almost no profits, reflecting that cash flow is showing signs of withdrawing from the market after a series of hot increases.
This is also understandable because the cash flow participating in the market in the past has used a relatively high margin leverage. When the market shows signs of correction, this cash flow can be temporarily withdrawn. However, experts say that the market has not formed a reversal trend.
In the short term, the VN-Index is likely to retreat to assess the support zone of 1,570-1,580 points, an area that can play the role of accumulation before the market find new upward momentum. Current cash flow is a good driving force to maintain liquidity, but it should not be expected to maintain a continuous increase if there is no rotation through leading stocks.
Looking back at the 2016 - 2018 uptrends, the market had 5 strong increases of 20 - 30%, then there was often a break, traveling sideways for 2 weeks or more, adjusting an average of about 10%. In the period of 2020 - 2022, the VN-Index had 4 stronger increases, from 37 - 52%, then adjusted 13 - 16%.
Experts say that investors can rely on these models to predict the time of adjustment and take advantage of reasonable buying and selling opportunities. Regarding valuation, after increasing by 50% from the bottom, the P/E and P/B of VN-Index have approached the 10-year average, meaning the market has shifted from a low-cost valuation zone to a reasonable one, often with a sideways trend.
The developments next week are assessed by investors to be clearly differentiated, when the mid- and small-cap group and some large stocks that have adjusted to the over-selling zone or have not increased much in the previous period can recover better, while large-cap stocks that have increased rapidly, especially banks, will continue to create pressure to adjust to the index.
In this context, some experts believe that investors who still hold stocks should maintain caution with deeply adjusted midcap stocks that can continue to be held for further monitoring, while for stocks that have increased strongly before, they should consider taking profits to preserve profits.
At the same time, it is necessary to avoid chasing during the period of market fluctuations and prioritize observing the reaction of the VN-Index around the support zone of 1,570-1,580 points before making a new disbursement decision.
Dr. Nguyen Duy Phuong - Investment Strategy Director of DG Capital - recommends that short-term investors should survey at a moderate level, while limiting the use of high leverage to avoid pressure when the market fluctuates.
For medium and long-term investors, they can continue to hold stocks and increase their position when the market adjusts, limits or uses low margin.
At this stage, investors should closely monitor cash flow and supply and demand through technical indicators, while complying with discipline to limit risks in adjustments. The current reasonable portfolio structure is 50% stocks and 50% purchasing power.
