In the context of the stock market lacking leading stocks while selling pressure is still constant, it has made it difficult for the market to break out.
Foreign investors continued to play a role in hindering the market when they net sold nearly 1,500 billion VND in the session of November 18, focusing on selling stocks in the VN30 group.
It is worth noting that after yesterday's trading session (November 18), although closing down for the third consecutive session, bottom-fishing demand has shown signs of entering the market, and with the VN-Index holding the support level of 1,208 points, it is highly likely that the downtrend is slowing down.
In the context of concerns about continued exchange rate escalation, the DXY index is approaching its 2-year peak, clearly, cash flow on the stock channel is also negatively affected.
The USD/VND exchange rate has increased rapidly again, approaching the peak in April in recent times. The increase in exchange rate has affected the psychology of investors in the stock market. Foreign capital has also increased net selling recently due to the increase in capital costs affecting investment efficiency.
In addition, the increase in USD/VND exchange rate also leads to an increase in the cost of imported input materials and commodity prices, affecting the room for monetary policy easing of the State Bank of Vietnam.
Historical statistics show that the stock market is often under pressure to adjust due to unusual developments in interest rates and exchange rates.
In this context, businesses that import or have large foreign currency loans face increased financial costs, while foreign capital flows also become more cautious due to exchange rate risks.
However, supportive factors such as a steadily growing trade surplus and an expected increase in remittances later in the year could help ease exchange rate pressure in the short term.
Long-term stability still depends on the State Bank's management measures and the next developments of the USD in the international market in the context of the continuing monetary easing trend of the Fed and many countries.
The current context shows that the market still lacks factors to trigger new cash flows to participate in short-term bottom fishing despite increasingly attractive stock valuations. Therefore, it will take a balance of supply and demand to help the stock market's decline slow down in the coming sessions to expect the situation to improve.
The market is expected to see some “technical recoveries” this week when the VN-Index tests the psychological support zone of 1,200 points and price momentum indicators are in the oversold zone.
However, if liquidity does not improve significantly, along with the net selling momentum of foreign investors, the index still has the probability of adjusting back with the nearest support being the 1,190-1,200 point area (around the bottom of August 2024).
Trading strategies focusing on risk management remain the top priority at this time. Stock positions using margin tools should be cautious and flexible in taking advantage of technical rebounds to reduce the negative impact of leverage and optimize prices to restructure the portfolio.
From a longer-term perspective, short-term fluctuations will be an opportunity to build the most optimal capital cost; a partial disbursement strategy can be activated to probe buying points for stocks of high-growth businesses with attractive valuations.
