Restructure portfolios, Vietnam stock market investors advised

With the Vietnamese stock market set to face short term corrections, investors should restructure their portfolios and consider purchasing potential stocks at their support zones, brokers say.

The VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), recorded a volatile trading week from August 14-18, taking away the gains of the prior three weeks.

The benchmark index fluctuated in the 1,220-1,240 points range in the first four sessions of the week. However, in the last session (Friday, August 18), active selling pressure increased sharply, starting from large-cap groups, especially the Vingroup trio of VIC (Vingroup), VHM (Vinhomes), and VRE (Vincom Retail), and then spreading to the whole market.

As a result, the VN-Index lost 55 points, or 4.5%, to 1,177 points, blowing away all gains made in previous weeks.

Notably, in the Friday session, the HoSE saw up to 1.7 billion shares change hands.

For the whole week, the VN-Index lost a total of 54.22 points, or 4.4%, and the HNX-Index on the Hanoi Stock Exchange (HNX) dropped 9.29 points, or 3.79%.

The trading value on the HoSE reached over VND125 trillion ($5.28 billion), up 11% week-on-week, equivalent to a 3.2% rise in trading volume compared to the previous week.

After three weeks of net buying, foreign investors turned net sellers to the tune of VND960 billion ($30.3 million) on the HCMC bourse and VND142.64 billion ($5.99 million) on the Hanoi bourse.

VIC, VHM and BID of BIDV bank had the most negative impacts on the VN-Index. VIC alone took more than 4.5 points.

On the other side, TMS of Transimex Corporation, S4A of Se San 4A Hydro Power JSC and VCB of Vietcombank were the most positive influencers.

According to Hoang Cong Tuan, chief economist of MBBank Securities (MBS), the week-ending drop came as the stock prices were relatively high after many weeks of gains. However, investors should not be too pessimistic because the uptrend of the market is still maintained, he said.

"For the stock market, a 5-10% adjustment is normal. As interest rates are falling and corporate profits are expected to improve in the third quarter of 2023, the market will continue to go up with corrections," Tuan said.

The MBS expert predicted that next week the VN-Index may head to the territory of 1,120-1,130 points. He said investors should observe opportunities to participate in the market, and at the same time undertake risk management with each stock in the portfolio.

Similarly, Le Duc Khanh, director of the investment capacity development department of leading broker VPS, recommended that investors narrow their portfolios and consider investing in potential stocks during the market's corrections in the coming weeks.

In a recent analysis, broker Saigon-Hanoi Securities (SHS) said that the August 18 fall was a normal correction and that the VN-Index will accumulate and consolidate strength in preparation for further uptrends in the near future.

In the short term, the market can experience a strong and unpredictable correction; however, short-term investors can still consider buying stocks in support areas during correction sessions, since the medium-term outlook remained good and the VN-Index was expected to experience a new recovery.

"In the medium and long term, investors can continue to keep their portfolios and take advantage of these corrections to increase their stock proportion, but they should choose leading tickers with good fundamentals and stable growth potential that are moving in the current accumulation state," it noted.

Another broker, Vietcombank Securities (VCBS), said that the VN-Index ended the week with a plunge accompanied by huge trading volume, so it is likely to face some sessions with strong fluctuations before stabilizing again, with the nearest support area around 1,130-1,150 points.

“Investors should consider reducing stock proportions definitively to manage risks and look for opportunities to disburse when the market stabilizes again,” it advised.