In the trading session on September 22, although VN-Index has recovered, liquidity decreased sharply, showing that cash flow is still cautious and the upward momentum depends significantly on some large-cap stocks, especially VIC.
Technically, the recovery helps reduce short-term pressure, but momentum is still neutral when the index does not have a consensus on liquidity and market breadth. Zone 1, 830-1, 860 points are noteworthy resistance levels while zone 1, 790-1, 800 points continue to play a supporting role.
Entering the trading session on September 23, the market continued to maintain its upward momentum, but unexpected selling pressure appeared in the large-cap stock group, creating pressure on the indices.
Closing today's trading session, VN-Index turned down more than 15 points, down close to the psychological milestone of 1,800 points. Market liquidity improved compared to yesterday, reaching nearly 18,000 billion VND. Large-cap basket contributed more than half.
The market continues to be strongly affected by the Vingroup group, especially VIC when this code alone caused the index to lose more than 12 points.
Securities companies believe that VN-Index is still in the process of accumulation and cannot break out of the 1,800 point zone due to investor caution during the period of lack of supporting information. The market is likely to continue to accumulate and fluctuate in the current range, while further improvement of cash flow is needed to create a foundation for a stronger upward momentum.
According to experts' assessment, the core reason for the serious decline in stock liquidity stems from the movement of the long-term credit cycle. After more than 10 years of maintaining a credit growth rate much higher than GDP growth, the economy has reached the peak of the credit expansion cycle.
This makes the room for loose monetary policy almost exploited thoroughly, forcing the market to accept a new level of higher interest rates from both the commercial banking system and the interbank market. High interest rates have directly withdrawn some cash flow from risky asset channels, pushing liquidity on the HoSE floor to decrease sharply.
In the September strategic report, SSI Securities Company stated that the market is in an accumulation phase, investors need more evidence to show that the upward momentum of the economy is turning into a broad and sustainable profit cycle.
SSI maintains a positive view in the medium term, but believes that developments surrounding the upgrade event should be viewed in the context that the market is still accumulating, instead of defaulting to this as the starting point of a new upward wave.
In the current context, investors need to manage the proportion and choose businesses, avoid putting all investment decisions on the upgrade schedule. First, maintain a leverage level suitable to the ability to withstand fluctuations, especially when the Fed just raised interest rates on September 16 and the tightening cycle shows no signs of ending. At the same time, maintain the necessary cash to avoid being forced to sell when the market adjusts.
Prioritize businesses with good business cash flow, healthy balance sheets and reasonable valuation. The valuation level is supporting this approach: Market P/E is around 12 times, if not including the Vingroup group, it is about 10 times - the lowest level of ten years. For stocks expected to benefit from FTSE, it is necessary to see how much expectation the price has reflected and how large the expected buying volume is compared to the liquidity of that code itself.
Investors can disburse partially when prices become attractive and monitor demand after restructuring sessions; the ability to maintain liquidity and recovery breadth is more meaningful than a strong increase session in a few large stocks. If inflation and interest rates put pressure, it is necessary to be more cautious with large-debt businesses with weak cash flow.
