Foreign cash flows push VN-Index past 3-year peak

With positive sentiment from both domestic and foreign investors, VN-Index on Monday surpassed the 1,400 mark after more than three years. The last time the benchmark index reached this level was on April 19, 2022.

Before the trading day on Monday, July 7, there were many concerns about the scenario that VN-Index would experience a shakeout adjustment, because this was the session that recorded 1.3 billion shares traded on Thursday, July 3 appearing in investor accounts.

Some securities firms are concerned that VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), is in a short-term overbought state after three consecutive weeks of increasing points.

However, contrary to those concerns, VN-Index opened the session on Monday, July 7 with excitement and maintained green throughout the morning session. The good sentiment of domestic and foreign investors supported the index. Cash flow also rotated between industry groups.

The positive sentiment continued to be maintained in the afternoon session. Notably, the index successfully surpassed the resistance of 1,400 points near the end of the session.

That meant, after more than three years, VN-Index officially surpassed the 1,400 mark. The last time the index reached this mark was on April 19, 2022, when the index dropped by 65.676 points to 1,406.45.

HoSE liquidity "exploded" with nearly 1.3 billion shares traded, equivalent to a trading value of nearly VND28,000 billion ($1.07 billion). Buying power overwhelmed the HoSE with 224 stocks increasing and only 87 stocks decreasing.

The market closed positively with the leadership of the banking group in the VN30 group, which comprises 30 largest caps. All stocks SHB, CTG, HDB closed at the session's highest level. Notably, SHB closed at the maximum level in a "no sell side" situation.

VN30 was also the main driving force on Monday when it increased by nearly 20 points (equivalent to 1.34%) with 27 stocks increasing, one stock unchanged, and two stocks adjusting down. Not only concentrated in the VN30 group, cash flow spread to the midcap (+0.38%) and smallcap (+0.66%) groups.

In terms of industry groups, banking had the strongest increase in the market. In addition to large-cap stocks, many small and medium-cap stocks performed positively. All "king stocks" gained well, except for PGB (-0.7%).

In addition, many stocks in the securities, residential real estate, industrial real estate, chemicals, healthcare, steel, cement, and fertilizer groups increased well.

An important driving force that brought VN-Index back above the 1,400 mark was foreign investors. On Monday, July 7 alone, foreign investors net bought over VND1,227 billion ($46.98 million) on the HoSE, marking four consecutive net buying sessions.

The net buying momentum of this group focused heavily on banks with remaining "room" such as SHB (net buying VND553.21 billion or $21.18 million), CTG (VND126.61 billion), and HDB (VND101.93 billion).

According to analysts, this development shows that foreign investors are likely restructuring their portfolios to anticipate a market upgrade that may take place next September.

At a regular press meeting of the Ministry of Finance on July 2, Hoang Van Thu, Vice Chairman of the State Securities Commission, said he believes that international organizations will agree to upgrade the Vietnamese stock market in the FTSE Russell assessment period in September this year.

FTSE Russell is one of the world's three leading index providers, along with MSC and S&P Dow Jones Indices, creating a reference base for international investors.

Deputy Minister of Finance Nguyen Duc Chi also said that the goal is to upgrade the stock market status from "frontier" to "emerging" this year. "Therefore, all work is being done with great effort."

The Ministry of Finance is coordinating with relevant ministries and agencies to implement work to have the market upgraded. However, one of the important factors that rating organizations are interested in is the assessment of foreign investors when participating in the market.