VN-Index still in retracement wave: experts

Vietnam’s benchmark VN-Index has bottomed out in the short-term and entered the first stage of retracement, securities experts say, adding that an uptrend cannot be confirmed until a clearer accummulation phase appears.

Retracements are temporary price reversals that take place within a larger trend. The VN-Index, which tracks the performance of the Ho Chi Minh Stock Exchange (HoSE), continued to move sideways this week with two sessions of strong fluctuations at the beginning of the week and three sessions going around the reference level later.

The index ended the December 12-16 trading week with a slightly increase of 0.67 points or 0.1% to 1,052.48, while the HNX-Index on the Hanoi bourse HNX decreased by 4.01 points or 1.8% to 212.99.

Trading value on the HoSE fell 18.1% from the previous week to VND71,179 billion ($3.01 billion), corresponding to a drop of 22.4% in trading volume to 3,956 million shares. Corresponding figures on the HNX were 26.5% to VND6,904 billion ($292.48 million) and 24.2% to 497 million shares.

Cautious investor sentiment pushed the market move sideways this week, with cash flow alternatively running into groups of stocks.

Steel tickers were in the growth spotlight with HPG of Hoa Phat expanding 6.25%, HSG of Hoa Sen Group 4.25%, NKG of Nam Kim JSC 6.02%, and TVN of Vietnam Steel Corp 7.16%.

The chemical and fertilizer groups also made positive contributions to the market, with DGC of Duc Giang Chemical Corp up 7.08%, CSV of South Basic Chemicals 3.79%, DCM of Petrovietnam Ca Mau Fertilizer JSC 1.05% and DPM of Phu My Fertilizer up 0.81%.

In the banking group, gainers included VPB of VPBank up 9.47%, MBB of MBBank 3.3%, VCB of Vietcombank 3.1%, EIB of Eximbank 22.9%, and TCB of Techcombank 3.2%.

Real estate stocks dropped sharply, the plunge led by VIC of Vingroup (-13.9%) and VHM of Vinhomes (-8.9%) .

Foreign investors were net buyers for the sixth consecutive week to the tune of VND1,879.4 billion ($79.6 million) on both bourses.

VND of VNDirect Securities was most net purchased with 16.6 million shares. It was followed by NVL of real estate developer Novoland and SSI of Saigon Securities with 15 million and 8.4 million shares, respectively. On the other side, VNM of Vinamilk was the most net sold stock with 5.3 million shares.

The units involving proprietary trading recorded a week of net buying with total value exceeding VND100 billion ($4.24 million), mainly of NVL and HPG shares.

Hoang Cong Tuan, an expert with MB Securities (MBS), said that the cash flow in the market at this time will not be as abundant as the post-Covid-19 period due to higher interest rates. Therefore, the market’s upward path will be bumpier, he predicted.

“Investors can take advantage of the market’s corrections to find profits from stocks of businesses with good business results and healthy operations,” he recommended.

Given movements during the past week, Saigon-Hanoi Securities analysts said that the VN-Index moving sideways with low trading volumes signalled that the correction period for accumulation was drawing to a close. However, the market was still in the correction phase of a retracement wave and the major index is likely to experience the next short-term rally to move towards the resistance territory of 1,150 points.

"The short-term signals this week show that the market is about to end the accumulation phase, opening up short-term investment opportunities, so short-term investors can take advantage of corrections to increase the proportion of stocks,” they said.

The analysts also advised investors to prioritize stocks of companies with good fundamentals and stable growth that are likely to exceed their old peaks.

As the territory of 1,030 points is still defined as a reliable support for the market, Vietcombank Securities (VCBS) experts said investors should remain patient, sell stocks with a good growth rate and increase the proportion of cash to wait for opportunities to buy stocks at better prices.