The stock market has just experienced a stormy trading week when VN-Index fell sharply by more than 50 points and quickly lost the important psychological milestone of 1,600 points right from the beginning of the week.
After a sharp decline, the index recorded 3 consecutive recovery sessions, thereby returning to the 1,670 point zone. This development partly shows that investor sentiment has become less negative, but the short-term trend still needs further confirmation, especially from the cash flow factor.
Notably, the recovery momentum took place in the context of liquidity maintained at a low level, reflecting that caution still prevails and cash flow has not shown clear signs of returning.
Currently, market supporting factors are not really clear. In the world, the developments of conflict between the US and Iran still contain many uncertainties, while the country is facing increasing exchange rate pressure and tense liquidity in the banking system.
The most worrying scenario for the stock market is not a short-term shock increase in oil prices, but the fact that energy prices will remain high for a long time. At that time, the impact will spread from input costs to inflation, interest rates, exchange rates and the risk appetite of cash flow, thereby creating significant pressure on the market.
The USD/VND exchange rate is putting pressure on the domestic currency, which may cause foreign investors to reduce net buying. Therefore, next week, the market may test the bottom for the 2nd time and needs more accumulation time before there is a clear recovery momentum.
At the same time, the bottom-fishing process of the market usually does not take place in a short time, so the current recovery may only be technical in the medium-term downtrend. The risk of VN-Index returning to test the 1,570–1,580 point zone is still high.
With a positive scenario, VN-Index holds 1,650, cash flow returns to the banking and oil and gas groups, the index may move up to 1,700-1,720. This will help improve liquidity, and foreign investors will reduce net selling.
In a negative scenario, if VN-Index falls below 1,640 points with large liquidity, the index may retreat to the 1,600-1,620 point range. Pressure from the US market and high oil prices will put pressure on transportation and consumer groups.
Cash flow needs to show signs of stabilizing again, especially the fact that leading stock groups are stopping being sold off. Currently, the market has shown some early signs such as the index continuously recovering, breadth improving and liquidity slightly increasing, but still not enough to confirm the bottom. In the context of low liquidity and cash flow not returning strongly, the risk of the market adjusting again when unfavorable information appears still needs to be noted.
From a market perspective, many factors are strengthening the possibility of forming a bottom zone. Recent fluctuations have not significantly changed the business profit prospects, while the valuation has retreated to an attractive level with P/E around 12 times. At the same time, many stocks have fallen into a state of deep oversale, showing that selling pressure has been partially relieved.
However, experts recommend that investors should not "bottom-fish" strongly. In the context that the trend has not been truly confirmed, the appropriate strategy is to explore disbursement with a low proportion, limit the use of leverage and avoid "all-in", while maintaining room to respond if the market continues to fluctuate.
Regarding investment opportunities, defensive stock groups are prioritized such as the insurance industry group - benefiting from the interest rate environment, the banking stock group with a stable foundation, and the electricity industry stock group thanks to relatively solid cash flow.
