Investors advised to buy stocks with good fundamentals amid market caution

Vietnam’s stock market is under short-term selling pressure and the benchmark VN-Index needs a shake-up for a stronger recovery, according to local securities companies.

The market's gaining momentum slowed in the past week under correction pressure, showing the return of investor caution.

The VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), opened the April 3-7 week in the green with strong gains in most groups. However, short-term profit-taking pressure transpired in the last two sessions of the week, making the benchmark index drop to below 1,070 points.

The VN-Index closed the Friday session at 1,069.71 points, up 5.07 points, or 0.48%, compared to the previous week, with improved liquidity. Meanwhile, the HNX-Index on the Hanoi Stock Exchange went up 1.98% to 211.6 points.

Trading value on the HoSE surged 29% from the previous week to over VND67.15 trillion ($2.86 billion), corresponding to an increase of 38.7% in trading volume. The Hanoi bourse saw week-on-week respective rises of 62.5% and 62.6%.

Foreign investors were net sellers for the second consecutive week with a value of more than VND736 billion ($31.4 million).

VCB of Vietcombank, BID of BIDV bank, VHM of real estate developer Vinhomes, and HPG of steel giant Hoa Phat had the most negative impacts on the VN-Index. VCB alone accounted for a 1.4-point drop on the index. Meanwhile, GVR of Vietnam Rubber Group, SSI of Saigon Securities, and MSN of Masan Group were the most positive influencers.

Expectations for the early operation of the KRX trading system, provided by the Korea Exchange (KRX), helped securities codes gain well, with BSI of BIDV Securities up 15.55%, VDS of Viet Dragon Securities 12.98%, FTS of FPT Securities 7.44%, AGR of Agribank Securities 7.03%, and MBS of MBBank Securities 6.96%.

Real estate saw improved liquidity with strong gainers including DIG of DIG Corp. (25.93%), VPH of Van Phat Hung Corp. (24.02%), NHA of Ha Noi South Housing and Urban Development Corp. (21.43%), L14 of Licogi 14 (20.98%), CEO of CEO Group (14.86%), and SCR of Saigon Thuong Tin Real Estate JSC (14.71%).

Other groups witnessed a divergence and maintained accumulation while investors wait for information on Q1 performances and business plans for 2023.

Saigon-Hanoi Securities (SHS) said that the market correction was necessary for the VN-Index to consolidate its uptrend towards the territory of around 1,100 points and further.

“The movement in a narrow range with low volume can continue until the market forms a new uptrend,” it said.

In the short, medium and long term, the market outlook should be positive when the VN-Index returns to its short-term uptrend, SHS said, adding that short-term investors should put money down during this period, especially during correction sessions.

“They should choose stocks of leading companies with good fundamentals and those with stable growth potential that are moving in the current accumulation state,” the broker advised.

Meanwhile, Vietcombank Securities (VCBS) recommended investors keep a close watch on the movement of the VN-Index in and around the area of 1,055-1,060 points and take advantage of strong fluctuations that are likely to take place in the coming sessions to buy stocks in securities, oil and gas, and real estate.