After a long holiday, the Vietnamese stock market only had two trading sessions in the week but fluctuated quite strongly. Selling pressure rose as soon as the market reopened in the context of investor sentiment being affected by unstable developments in the international market.
VN-Index at one point retreated to near the 1,800 point threshold before the support from a few pillar stocks helped the index narrow down most of the decline. In the last session of the week, the index rebounded strongly with demand concentrated in the large-cap group while the breadth of the whole market was not really consensual.
VN-Index closed the first trading week of September at 1,853 points, up nearly 21 points compared to the week before the holidays.
Regarding the level of impact, the upward momentum of VN-Index in the last session of the week was completely led by Vingroup and financial group stocks. Specifically, VIC, VHM and VPL contributed nearly 23 points, while VPB, STB, TCB and TCX brought in about 4 more points of increase. In the opposite direction, the 10 most negatively impacted codes only took away about 2 points of the general index, of which SSB was the stock that caused the most significant pressure.
Foreign investors net sold with a value of nearly 1,500 billion VND on both exchanges last week. In which, this block net sold more than 1,400 billion VND on HOSE and nearly 45 billion VND on HNX.
After a strong recovery in August, the stock market entered September with a more positive state but also faced an important challenging zone.
According to the assessment of Nhat Viet Securities Company (VFS), VN-Index has regained important moving averages and maintained an upward structure, but profit-taking pressure may increase as the index enters the resistance zone of 1,850-1,870 points.
VFS Securities Company believes that the recovery momentum in the past time mainly came from domestic cash flow. Liquidity has improved significantly in increasing sessions, while net selling pressure from foreign investors decreased significantly compared to the previous period. This is considered a supporting signal for the market when entering September, especially in the context that foreign capital is expected to have more momentum from Vietnam's official upgrade in the FTSE Russell GEIS index.
Regarding valuation, the P/E ratio of VN-Index is currently around 12.46 times, significantly lower than the 10-year average of 15.32 times. This shows that the valuation level still has room, although the increase room of the index in the short term will depend more on the ability to improve cash flow and market breadth.
A noteworthy point is that cash flow has not completely spread evenly. In the recent increase, banking, real estate and securities continued to be groups attracting large liquidity, while cash flow tended to focus back on the large-cap group as VN-Index approached the resistance zone. Therefore, the ability to maintain the upward momentum will require wider participation of industry groups instead of just relying on some pillar stocks.
According to VFS Securities Company, the September market will focus on two main factors: the possibility of VN-Index surpassing the 1,850-1,870 point range and the developments of foreign capital flows around the FTSE Russell GEIS restructuring period, expected to take effect from September 21.
In a positive scenario, if VN-Index convincingly surpasses the 1,850-1,870 point zone with improved liquidity and strengthened market breadth, the index may head towards the peak of 1,900-1,930 points. Foreign capital returning along with positive Q3 business results prospects will be supporting factors for this scenario.
In the opposite direction, profit-taking pressure may appear when the index enters a strong resistance zone. At that time, VN-Index may retreat to test the 1,780-1,815 point zone before forming a new wave of movement. VFS assesses that corrections, if they appear, will open up opportunities to re-select stocks with good fundamentals and reasonable valuation levels.
For investors, VFS Securities Company recommends not to chase after the recent strong increase. The portfolio can maintain the proportion of stocks at 40-60%, prioritizing leading stocks that still maintain the price base, improved liquidity and have positive business results. New disbursement should be implemented partially, while the proportion should only increase sharply if VN-Index convincingly exceeds the 1,850-1,870 point range and is confirmed by liquidity.
