VN-Index drops after four-week gaining streak

After four consecutive weeks of gaining, the Ho Chi Minh Stock Exchange’s (HoSE) VN-Index was under correction pressure and closed at 1,120.18 points in the last week of June.

The Vietnamese stock market recorded a relatively pessimistic trading week (June 26-30) as two losing sessions at the end of the week swept away all previous achievements.

Notably, on Thursday, massive sell-offs, especially on DIG of real estate developer DIG Corp. and HPG steel maker Hoa Phat, caused the VN-Index to lose nearly 13 points, the strongest fall since the end of March.

VCB of Vietcombank, BID of BIDV bank, and GAS of PV Gas had the most negative impact on the VN-Index this week. Of which, VCB alone deprived the index of more than 2 points.

On the other side, MWG of Mobile World Investment Corp and HPG and GVR of Vietnam Rubber Group were the most positive influencers.

The VN-Index ended June and the second quarter of 2023 at 1,120.18 points. It declined 0.81% from the previous week, but surged 4.19% compared to May.

The trading value on the HoSE reached over VND82.8 trillion ($3.51 billion), up 0.8%, while the trading volume decreased by 1.2% from last week.

The liquidity on the Hanoi Stock Exchange (HNX) fell 16.07% to VND8.24 trillion ($349.4 million). Cash flows mainly ran into building materials, retail and transport groups.

Foreign investors were net sellers for the second week on the HoSE to the tune of VND340.53 billion ($14.4 million), but were net buyers on the Hanoi bourse with VND161.8 billion ($6.86 million).

According to Saigon-Hanoi Securities (SHS), this week's correction was necessary after the VN-Index had surpassed the resistance territory of 1,120 points after a long period of gaining. Given the current state, the benchmark index is likely to soon rise again towards the stronger resistance area of around 1,150 points.

However, in the short term, the market is forecast to continue recording corrections in a retracement wave towards the strong resistance zone of 1,150 points. Surfing investors can take advantage of corrections to restructure their portfolio, but should maintain an average proportion of stocks and limit buying high-priced stocks.

In the long term, SHS said the market is still positive despite corrections during the week and continues accumulation in a wide range of 1,000-1,150 points. An uptrend will be formed if the VN-Index accumulates enough and passes the 1,150-point mark.

Medium- and long-term investors who have put down money in the past period should maintain their current portfolios, it said, advising them to take advantage of correction sessions to increase their proportion of stocks.

“They should choose tickers of leading firms with good fundamentals and stable growth potential that are moving in the current accumulation state,” SSI said.

Sharing the same view, broker Agriseco argued that the corrections in the last two sessions of the week were necessary to balance supply and demand after seven consecutive gaining sessions.

It predicted that the VN-Index will fluctuate around 1,115-1,125 points with low liquidity in the first sessions of next week before returning to the territory of 1,130-1,140 points in the last sessions.

In the medium and long term, the market is still in an uptrend, so short-term corrections are opportunities for investors to accumulate stocks. "At the support area of 1,115-1,120 points, investors can pour money into leading tickers in the fields of steel, banking, food and beverage, and industrial park infrastructure," it advised.

Similarly, KB Securities Vietnam said that the main index will have many chances to recover and reach the support territory of around 1.115-1.117 points. Investors are recommended to continue holding medium-term positions and pursue a strategy of buying stocks at support areas and selling them at resistance zones.