Cautious trading seen in stock market amid mixed sector performance

Cautious trading seen in stock market amid mixed sector performance

With liquidity tightening and foreign investors continuing to sell off, making prudent investment decisions has become increasingly crucial.

Traders work on the trading floor of Saigon - Hanoi Securities. —Photo vietnamplus.vn

The Vietnamese stock market experienced a week of cautious trading, reflecting investor hesitation amid macroeconomic pressures and internal challenges.

With liquidity tightening and foreign investors continuing to sell off, making prudent investment decisions has become increasingly crucial.

Following a week of declines, where the market faced selling pressure around the old resistance level of 1,700 points, the VN-Index fluctuated within a narrow range, exhibiting clear signs of consolidation.

Phan Tấn Nhật, head of analysis at Saigon-Hanoi Securities (SHS), noted that early in the week, the index faced downward pressure, dipping to around 1,620 points before a slight recovery. However, the market’s high level of sector divergence and low liquidity persisted.

By the end of the week, the VN-Index on the Ho Chi Minh Stock Exchange (HoSE) closed at 1,660.70 points, remaining above the significant psychological support level of 1,600 points.

The HNX-Index on the Hanoi Stock Exchange (HNX) was last traded at 276.06 points.

For the week, the VN-Index gained 0.13 per cent while the HNX-Index rose slightly by 0.07 per cent.

The market tendency was correction and accumulation. Positive movements were observed in sectors such as construction, along with recoveries in insurance, oil and gas and industrial parks.

Conversely, key sectors including technology, steel, retail, ports, real estate, securities and fertilisers faced significant downward pressure.

This divergence reflected investor caution amid a lack of clear opportunities and the approaching end of the third quarter (Q3), which brings NAV (net asset value) adjustments for funds and year-end credit evaluations.

One of the most notable trends this week was the decline in market liquidity for the second consecutive week.

Trading volume on HoSE fell by 9.9 per cent from the previous week, averaging 910 million shares per session, significantly lower than the August average of 1.67 billion shares.

The weak capital flow indicates a cautious stance from both buyers and sellers.

Moreover, foreign investors continued their net-selling trend, marking the tenth consecutive week of outflows. During the week, the net selling value on HoSE reached nearly VNĐ7.4 trillion (US$278.5 million), bringing the total net sell-off for the year to over VNĐ96.5 trillion, surpassing last year’s total.

This withdrawal of capital exerts substantial pressure on market sentiment and overall performance.

Nhật from SHS said that the short-term trend for the VN-Index was currently one of accumulation, with less favourable conditions below the resistance level around 1,665 points, corresponding to the 20-day average price.

Many stocks that peaked in late August were undergoing adjustments and accumulation, striving to overcome short-term downward trends.

He cautioned that most stocks would attempt to recover toward previous highs and might face renewed selling pressure.

The VN-Index was expected to test the price range around 1,680 points, similar to levels seen in early September. The market would remain volatile within a narrow band following a prolonged price increase, he added.

In the longer term, Nhật believes the VN-Index is in a consolidation phase after a significant upward surge, surpassing historical highs from 2022.

"To improve the VN-Index, new growth catalysts are essential, grounded in fundamental valuations, growth prospects for the end of the year and cautious evaluations based on anticipated Q3 earnings," he said.

Given current market conditions, many stocks that had adjusted over the past month were now at relatively reasonable price levels.

Investors might consider accumulating shares in anticipation of strong Q3 and year-end earnings. However, supply pressure might increase, with many stocks facing short-term selling as they approach previous highs.

As a result, investors could increase their purchases as the VN-Index approaches the 1,680–1,700 point range, Nhật said. 

Bizhub