Cautious trading as market await signals from the US

Cautious trading as market await signals from the US

The first week of December is set to bring significant economic data from the US, ahead of the Federal Reserve's upcoming meeting on December 11.

Traders work in a trading room of a securities firm in Hà Nội. — Photo bnews.vn

Traders work in a trading room of a securities firm in Hà Nội. — Photo bnews.vn

The domestic stock market closed the last week of November on a positive note, but the breadth was in negative territory. 

The VN-Index on the Hochiminh Stock Exchange (HoSE) rose more than 36 points during the week, primarily driven by large-cap stocks from the Vingroup conglomerate.

The trio of Vingroup (VIC), Vinpearl (VPL) and Vinhomes (VHM) contributed nearly 40 points to the index, while most other sectors either remained flat or experienced slight declines. 

VIC has maintained a strong upward trend since November 12 following a prolonged consolidation period, becoming a key pillar for market support. VPL and VHM have also provided substantial support, although they trailed behind in leading the market. 

Other standout performers included GELEX Electricity (GEE), Vietjet Aviation (VJC) and Vinamilk (VNM).

Market liquidity remained low, reflecting investor caution. 

According to the Vietnam Construction Securities JSC (CSI), ongoing interest rate increases have led to a trading volume that is 43.9 per cent below the 20-week average.

For the past two weeks, retail investors have continued a selling trend, offloading nearly VNĐ2.7 trillion (US$101 million), marking the second consecutive week of significant selling pressure.

Foreign investors also maintained the net selling spree, though at a slower pace of about VNĐ600 billion. 

Amid the weakening retail and foreign capital, local institutions have emerged as crucial supporters, enabling the VN-Index to hold its ground near the 1,700-point level. 

November marked a rebound for the VN-Index following the significant volatility of October, with a total increase of 3.13 per cent, closing at 1,690.99 points. 

However, trading liquidity saw a dramatic decrease, with average trading volume on the HoSE sinking to just 700 million shares per session, compared to over 1 billion in the previous month. 

Foreign investors net sold over VNĐ8.5 trillion during the month, maintaining a trend of capital withdrawal, though at a shrinking scale.

Analysts at Saigon-Hanoi Securities (SHS) say that many stocks have reached reasonable price levels after a corrective cycle from September to October, with growing demand at lower price points and decreasing supply pressure.

Nevertheless, the market presents few quality investment opportunities, necessitating cautious decision-making from investors before new capital deployment.

CSI maintains a recommendation to hold previously acquired stocks, advising only moderate increases in allocations during corrective periods.

Aggressive buying should be reserved for when liquidity shows clear improvement, and excessive equity weights should be avoided as large capital remains hesitant.

According to Pinetree Securities, the recent rise in the VN-Index, amidst retail capital outflows, may represent a technical correction phase rather than a strong indicator of a deeper trend reversal.

Experts believe that the VN-Index is likely to continue exhibiting sector divergence and mainly consolidate around current levels in the early days of the upcoming week. 

Should certain groups, particularly real estate or oil and gas, absorb supply well and rally, there is potential for the index to surpass the 1,700-point mark in the latter half of the week, paving the way toward previous highs around 1,750 points. 

Conversely, if capital flows do not improve or selling pressure intensifies, the index may retreat to test support levels between 1,640 and 1,650 points before setting the stage for the next upward movement.

The current strategy is to maintain a positive yet selective outlook. Investors holding stocks should monitor market responses around the 1,700-point threshold, with strong sell decisions only warranted upon clear signals of weakening capital flows or as the index approaches higher resistance levels.

The first week of December is set to bring significant economic data from the US, including employment reports and ISM indices, ahead of the Federal Reserve's upcoming meeting on December 11. 

The trend of US interest rates remains a critical variable influencing global market sentiment. Market participants are increasingly optimistic that the Federal Reserve will keep rates steady, but unexpected hawkish comments could still pose risks.

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