Vietnamese stock market expected to escape downtrend

The benchmark VN-Index started 2023 with positive developments, raising hopes that the Vietnamese stock market will escape from its downtrend while providing fresh investment opportunities for investors.

In the first trading session of 2023, the VN-Index, which tracks the performance of the Ho Chi Minh Stock Exchange (HoSE), recorded a strong gain of 36.81 points with the support of blue chips. However, cautious sentiment quickly returned, causing the major index to drop by 4.38 points in the last session of the week.

Ending the trading week from January 3-6, the VN-Index increased 44.35 points or 4.4% to 1,051.44, while the HNX-Index on the Hanoi bourse gained 5.34 points or 2.6% to 210.65.

Trading value on the HoSE fell 10.8% from the previous week to VND40,885 billion ($1.74 billion), corresponding to a decrease of 9.2% in trading volume to 2,336 million shares. The respective figures on the HNX were 16.6%, VND3,829 billion ($163 million), and 15.2% for 273 million shares.

VCB of Vietcombank, BID of BIDV bank, VIC of Vingroup, SAB of brewer Sabeco and HPG of steel maker Hoa Phat had the most positive impacts on the VN-Index. On the other side, VJC of Vietjet Air, NVL of Novaland Group, and PVT of PV Trans were among the biggest losers.

The positive movement of the market in the past week helped all major stocks recover. The oil and gas group was the biggest gainer with 8.9%, with PLX of Petrolimex expanding 10.7%, BSR of Binh Son Refinery up 10.2%, OIL of PV Oil 7.9%, PVD of Petrovietnam Drilling 3.1%, and PVS of Petrovietnam Technical Services Corporation 7.%.

Banking stocks came second with a rise of 5.6%, with VCB up 5%, BID 7.9%, CTG of Vietinbank 5%, TCB of Techcombank 7.2%, VPB of VPBank 5.9%, STB of Sacombank 8%, and LPB of LienVietPostBank 10.3%.

Foreign investors were net buyers for the ninth consecutive week on both exchanges to the tune of nearly VND2,250 billion ($95.86 million). HPG was net bought the most with 18.2 million shares, followed by POW of PV Power and VRE of Vincom Retail with 8.1 million and 6.6 million shares, respectively. Meanwhile, DPM of Petrovietnam Fertilizer & Chemicals Corporation was net sold the most with 2.6 million shares.

Evaluating the last trading week, Saigon-Hanoi Securities JSC (SHS) said that the market in the year-end and new-year period has showed many positive signals from the net buying streak of foreign investors to the positive movements of some key groups, including banking. With the current state, the VN-Index is expected to exit its downtrend in the near future.

“If the VN-Index gets out of its downtrend in the near future, it is projected to enter a new rally towards the territory of 1,150 points,” SHS analysts said.

The market cannot enter the uptrend phase right away but will move in retracements with a narrow range before an uptrend really appears, investors are advised to take a short-term position, the broker recommended.

The current attractive stock prices are opening up opportunities for mid- and long- term investors. However, they should focus on stocks with good fundamentals or leading stocks in industries with brighter profit growth prospects next year.

Meanwhile, Vietcombank Securities Company (VCBS) analysts said that the VN-Index has shown signs of weakening, signaling a possible short-term correction if selling pressure increases. Its nearest support territory will be 1,030 points.

They recommended that investors actively take profits from stocks which have gained well. In addition, strong shaking sessions will also offer good opportunities for investors to consider surfing strategies, focusing on securities, banking, and oil and gas stocks.