Foreign investors net buy over $497 mln on Vietnam's stock market from July 1-15

VN-Index, which represents the Ho Chi Minh Stock Exchange, dropped by 9.77 points to 1,460.8 on Tuesday, ending its seven-session gaining streak.

The reduction was strong at the VN30 group, which comprises of 30 largest-cap stocks. VN30 lost 11.82 points to 1,593.84. Twenty five out of the 30 stocks decreased, with strongest declines from 1-2% seen at BCM, GVR, VRE, VCB, VHM, and VIC.

Of the five remaining stocks that gained, broker SSI increased the most, by 2.52 points.

The HoSE recorded a high transaction value of VND34,509 billion ($1.32 billion), up nearly 10% compared to the previous session. This reflected cash flows waiting for price corrections to enter the market are very large.

Foreign investors on Tuesday net bought on all the three exchanges (HoSE, Hanoi Stock Exchange or HNX, and unlisted public companies market UpCom), to the tune of VND1,074 billion ($41.1 million).

This marked their 10th consecutive session of net buying, with a total value of nearly VND13,000 billion ($497.4 million).

Foreign cash flow still focused on leading securities, banking and real estate stocks like SSI, VPB, SHB, STB, MSB, DXG, and VIC, while taking profits at HPG, VHM, VIX.

Tran Hoang Son, director of market strategy for VPBank Securities (VPBankS), assessed that VN-Index is very close to the 1,500-1,545 point range, the peak recorded in the periods of November-December 2021 and early January 2022.

In the past week of July 7-11, stocks increased by 5%, the strongest since 2022. Trading volume reached a historical high, reaching 6.1 billion shares.

However, VN-Index is also reaching strong resistance zones. The market has had three consecutive months of strong growth in May, June, and July. Currently, the index is approaching the 100% Fibonacci zone and there may be fluctuations during the coming sessions or adjustments of 2-5% wthin one or two weeks.

Fibonacci zones are a technical analysis tool that uses Fibonacci numbers to identify potential areas of support and resistance on a price chart.

At the same time, the RSI index on the weekly chart is also entering the overbought zone. Looking back at history, when RSI enters the 75-80 zone, the market is likely to fluctuate and correct. In the periods of December 2020 and June 2021, RSI entered the overbought zone, causing the market to fluctuate very strongly.

The relative strength index (RSI) is a technical analysis momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset.

Therefore, during this period, Son recommends that investors should avoid buying stocks that have increased rapidly and fallen into the FOMO rhythm.

"FOMO rhythm" refers to the cyclical pattern of buying and selling influenced by the fear of missing out (FOMO). This psychological phenomenon drives investors to make impulsive decisions, often chasing recent price increases or trends, without proper analysis or risk assessment.

However, the market will shake to go up, not down. The market has entered an uptrend. With the current strong growth momentum, surpassing the historical peak of 2021-2022 is just a matter of time, Son predicted.

He expects the time to surpass the peak to fall in September-October this year. If foreign investors continue to disburse strongly as they do now, stocks can surpass the peak in late July and early August.

The market's momentum comes from policy easing, a positive external macro context, and the market continuing to have many "stories" to look forward to, such as changes in institutional reforms, new pro-growth laws, a market status upgrade, and foreign investors returning to net buying.