Foreign investors are diligently selling net
During the past week, although the stock market quickly regained the strong psychological threshold of 1,200 points, VN-Index still could not escape the downtrend because of the sharp decline on the first day of week 5.8.
Liquidity on HOSE last week increased slightly by 6% compared to the previous week, with total transaction value reaching 85,351 billion VND. Foreign investors had a net selling week of up to 4,000 billion VND with a strong focus on selling blue-chip stocks.
The sharp drop in market liquidity in July could be the main factor why the market could not surpass the 1,300 point mark and only moved sideways during the month. The driving force for VN-Index's increase in the early period of 2024 is the current decreasing cash flow from individual investors. Meanwhile, macro factors such as economic growth, inflation are still close to the Government's target and exchange rates are being controlled, which are positive factors affecting the market.
In August, experts assess that the risk of a market decline will increase mainly due to the negative influence of the macroeconomic situation of major economies as well as escalating geopolitical tensions in the region. Middle East region.
Statistics show that, in the past month, up to 60% of stocks on three exchanges have dropped over 15% from their peak. All 50 most traded stocks fell in price, with half falling more than 20%. This statistic shows how difficult it has been for investors to find opportunities and avoid losses recently. August promises to continue to be a difficult month as pressure to withdraw capital continues from foreign investors in the context that market liquidity has not improved.
Margin concerns appear
An issue that is being discussed a lot at the moment is that after reaching peak liquidity as well as the ability to attract cheap cash flow in the second quarter of 2024, transaction value decreased rapidly in July under net selling pressure from the bloc. foreign exchange, internal crowding, and issuance pressure. Investor cash balances decreased while margin increased to a record level.
There have been many warnings when the margin ratio is high and the market trend is not favorable. A large amount of margin may be a loan from business owners and shareholders to finance other activities, indicating difficult access to credit.
This amount of margin will create negative effects for the market if the cash flow situation of these businesses and individuals continues to be difficult, and large mortgage disbursement will have a more negative impact on the general market than before. Margin settlement of retail investors. ABS Securities Company proposed 2 scenarios for VN-Index in August.
Scenario 1, in case the world situation is "peaceful", if VN-Index maintains the 1,166 mark, it will form a cumulative sideways structure.
Scenario 2, the opposite case, the scenario where prices adjust down in August is preferred. If the weekly closing price cannot maintain the 1,166 point mark, the general market will continue to adjust down. Adjustments can take place quite quickly and strongly. At that time, the market's most recent 12-month P/E is expected to decrease to a quite attractive level of 12.6x - 11.9x. Therefore, in August, experts recommended that medium-term risk management be given top priority. Trading stocks during technical recovery phases should be carefully considered.
