Foreign capital massively flows into banking, securities stocks

Foreign investors net bought for the sixth consecutive session on the Vietnamese stock market Wednesday, to the tune of nearly VND2,000 billion ($76.5 million), focusing on banking and securities stocks.

Despite concerns about the correction, VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), continued to increase by 15.86 points to 1,431.29, extending the gaining streak to the fourth session and gradually approaching the historical peak of 1,500 points.

The driving force came from the banking and securities groups. Most banking stocks increased, with TPB nearly hitting its ceiling price, up 6.43% to VND14,900 ($0.57) per share; VCB by 4.24% to VND61,500; and HDB, OCB, VPB, NAB, and BID by about 2% to 3%.

There were up to six banking stocks in the top 10 with the most positive impact on the market. VCB led the pack, contributing five points.

Banking stocks broke out in the context of positive profit expectations for the first six months of the year, removal of some legal bottlenecks, and a recovering real estate market, creating momentum for banks with large real estate loan balances to benefit.

On the other hand, Prime Minister Pham Minh Chinh recently requested the State Bank of the Vietnam, the country's central bank, to draft a proposal to eliminate the credit limit mechanism from 2026.

Along with that, the securities group had positive developments recently over the possibility of market status upgrade from "frontier" to "emerging" in September.

SSI closed the session up 5.55% to VND28,550 ($1.09) per share. It was one of the 10 stocks positively impacting VN-Index. CTS and TCI hit their ceiling prices at times during the session, while ORS hit its ceiling price to VND10,200.

In addition, a major driving force that cannot be ignored was foreign cash flow. Foreign investors net bought a total of nearly VND2,000 billion ($76.5 million) on the three bourses, marking the sixth consecutive session of net buying.

Stocks with the strongest net buying were in banking and securities groups, such as SSI, SHB, VCB, TPB, VPB, HDB, VIX, and VND.

Cash continued to massively flow into stocks, with liquidity on the HoSE alone reaching nearly VND35,000 billion ($1.34 billion), surpassing the “explosive” session on July 3.

Of this, order matching transactions reached over VND33,500 billion, while put-through transactions were only nearly VND1,300 billion. This shows the excitement of investors despite the fact that the market has recovered more than 30% from the bottom of April.

Tran Hoang Son, director of market strategy at VPBank Securities (VPBankS), commented that the market is still positive in the medium and long term, but in the short term, RSI (relative strength index) and some other technical indicators are entering the overbought zone.

RSI measures the speed and magnitude of a stock's recent price changes to detect overbought or oversold conditions in the price of that stock.

"Therefore, at resistance zones such as 1,430 or 1,450 points, technical corrections may appear. Once the adjustment is complete, the market will gain momentum and reach a new high of 1,500-1,550 points in the next six months," he said.

Last week, VN-Index had four consecutive gaining sessions before adjusting on July 3 with outstanding liquidity of more than VND33,000 billion ($1.26 billion). Therefore, it is not impossible that the market will have an adjustment after the four recent consecutive gaining sessions.