Vietnam stock market unlikely to experience further steep declines in next sessions: experts

The probability of continued sharp falls in the Vietnamese stock market over the next sessions is relatively low, barring unexpected geopolitical turbulences that could cause significant volatility, according experts.

The stock market continued to experience a week of corrections as pressures from exchange rates and interbank interest rates show no signs of easing.

During the past trading week (November 11-15), the reference exchange rate was continuously revised up, and the interbank exchange rate nearly returned to mid-year highs.

Additionally, interbank interest rates have risen above the 5% threshold, negatively affecting investor sentiment as well as the performance of banking, securities, and steel stocks which are highly sensitive to exchange rate and interest rate fluctuations.

The continued net selling by foreign investors, particularly in blue-chip stocks, has further increased pressure on stock indices. Foreign investors net sold nearly VND4 trillion ($157.54 million) during the week.

Closing the trading week, the VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE) dropped by 34 points, or 2.71%, to 1,218.57, with average daily trading volume of 665 million shares, up nearly 29% from the previous week. The average trading value reaching VND16.8 trillion ($661.7 million) per session, up nearly 25%.

Truong Hien Phuong, senior director of KIS Vietnam Securities, noted that during the session on November 12, the market experienced significant selling pressure, particularly towards the end of the session, a sign of large-scale sell-offs, creating a sense of panic among investors. In the following sessions (November 14 and 15), the VN-Index continued to face forced sales from margin accounts.

“In my opinion, the selling pressure will gradually weaken in the upcoming week. The deep declines will create opportunities for investors holding cash, and demand could return,” he said.

The expert also believed that probability of a strong correction or deep declines in the coming sessions is low, unless there is unexpected geopolitical news. “However, there is no basis to expect a market boom. The outlook is likely to improve only in 2025,” he added.

Phuong advised investors with a large cash position to consider buying stocks with strong financial performance and positive outlook during sessions when the VN-Index goes down.

On the other hand, investors holding stocks with high prices should consider restructuring their portfolios. Key sectors to focus on include industrial real estate, public investment, construction materials, securities, and logistics, he noted.

Meanwhile, Dinh Quang Hinh, head of macro and market strategy at VNDirect Securities, recommended prioritizing portfolio management as short-term risks remain high.

He pointed out that in the context of a lack of strong supporting information and no signs of a sustainable reduction in interbank interest and exchange rates, investors should focus on risk management at this time.

For those holding a high proportion of shares or using leverage, it would be wise to take advantage of any technical rebounds to reduce them, he said, adding that investors with a low proportion of shares or short-term trading strategies should refrain from bottom fishing until the market confirms a reversal point.