Vingroup stock rally helps VN-Index gain for sixth straight week

Vietnam's largest private company Vingroup (VIC) was the driving force that helped the benchmark VN-Index close the August 7-11 week in the green.

The index, representing the Ho Chi Minh Stock Exchange (HoSE), saw green covering most stock groups in the first trading session of the week, helping it rebound strongly to the area of 1,240 points.

However, demand gradually weakened and was replaced by an increase in selling pressure, causing the index to lose momentum when approaching the 1,250 point territory. This pressure was evident on August 9 and August 10 when the VN-Index dropped to about 1,220 points.

In the last session of the week on Friday, strong demand for large caps such as VIC, VCB of Vietcombank and STB of Sacombank created a positive trend to help the market bounce back into the green.

VIC alone contributed approximately 4.6 points to the main index. After 10 trading sessions from July 31 to August 11, the stock soared 42% in value, recording its highest price in 14 months at VND72,600 ($3.06) per share.

VIC’s strong gain was attributed to the listing of shares by its subsidiary, electric vehicle maker VinFast, on the Nasdaq on or around August 15.

Vingroup’s market capitalization increased by VND82.8 trillion ($3.48 billion) in half a month to nearly VND277 trillion ($11.68 billion), regaining its position as the second largest company by market capitalization in Vietnam, after Vietcombank.

The VN-Index ended the week at 1,232.21 points, an increase of 6.23 points from the previous week, marking its sixth consecutive gaining week.

The average trading value per session on the HoSE was VND22.53 trillion ($948.23 million), down 1.3% from the previous week, but up 18.4% compared to the five-week average and 59% compared to the previous 20-week average.

Cash flows mainly ran into the real estate, food and beverages, electricity, water, petroleum and gas groups.

Domestic individual and institutional investors turned net buyers, while foreign investors and units engaging in proprietary trading were net sellers.

After three consecutive weeks of net buying, foreign investors net sold VND692 billion ($29.1 million) on the HCMC bourse last week. SSI of Saigon Securities, VHM of Vinhomes, VRE of Vincom Retail, VPB of VPBank, and FUEVFVND of DCVFMVN DIAMOND ETF were the most net sold by the group.

According to Viet Dragon Securities (VDSC), the VN-Index is likely to gradually recover to around 1,240-1,245 points. It recommended investors observe and evaluate the support of cash flows in the coming time. They can temporarily hold stocks that are attracting cash flows.

“However, it is necessary to consider the possibility of a recovery to take profits from or reduce the proportion of stocks that are weakening to minimize risks,” VDSC advised.

Another broker, Vietcombank Securities (VCBS), argued that the area of around 1,250 points will remain a strong resistance zone for the VN-Index in the short term, so investors should actively narrow their portfolios, sell off stocks that are not matching the benchmark index's performance, and only hold tickers with good accumulation foundations that are attracting cash flows in groups such as real estate and banking.

Sharing the same view, Saigon-Hanoi Securities (SHS) held that in the short term, the VN-Index is forming a new accumulation base with correction sessions. In the medium and long term, the market is on an uptrend, targeting the 1,300-point territory.

"Investors can take advantage of these corrections to increase their portfolios, but they should choose leading tickers with good fundamentals and stable growth potential that are moving in the current accumulation state," it noted.