Market may continue to correct this week

Market may continue to correct this week

Experts advise investors to exercise risk management and trade cautiously in the upcoming sessions, indicating that the next support level for the VN-Index is around 1,625 points.

An investor talks over the phone while watching the market's movements in a securities firm transaction room. — VNA/VNS Photo

The Vietnamese stock market experienced a turbulent week characterised by substantial downward adjustments, heavily influenced by large-cap stocks from the Vin group. 

On the Hochiminh Stock Exchange (HoSE), the VN-Index reported only a single increase early in the week, followed by four consecutive declines, closing the week down at 1,646.89 points.

For the week, it lost 94.43 points, or 5.42 per cent.

This sharp decline made the VN-Index one of the worst-performing stock indices globally.

Specifically, during the last trading session, the index lost 52 points, or 3.06 per cent, demonstrating a stark contrast to the upward movements seen in most other Asian markets, which reported gains of 0.5-2 per cent.

Similarly, the HNX-Index on the Hanoi Stock Exchange (HNX) posted losses, ending the week at 250.09 points, down 10.56 points or 4.05 per cent.

The VN-Index's downturn defied earlier predictions from many securities firms that anticipated technical adjustments would be followed by a rebound to previous highs around 1,766 points, driven by active foreign investor participation and positive domestic sentiment.

Instead, the market witnessed a cautious flow of capital, with the average trading value per session dropping to about VNĐ20.3 trillion (US$772 million), 15 per cent lower than the week prior. 

Notably, one session recorded a trading volume of only VNĐ16.2 trillion, marking the lowest level in six months.

Several factors contributed to this significant decline. First, increases in short-term deposit interest rates by banks negatively impacted investor sentiment towards the stock market. 

Foreign investors also resumed heavy selling after a week of net buying, leading domestic participants to become pessimistic about short-term prospects. Additionally, the market typically experiences a slowdown towards the year's end, compounded by a lack of positive information.

However, experts believe this prolonged decline and the sharp drop of over 52 points in the final session may stimulate new capital inflows, potentially improving the VN-Index's performance over the last two weeks of the year.

Analysts from BIDV Securities (BSC) recommend that investors exercise risk management and trade cautiously in the upcoming sessions, indicating that the next support level for the VN-Index lies around 1,625 points.

TP Securities (TPS) said that the VN-Index's sharp correction is evident as it faced widespread selling pressure, with trading volumes surpassing the 20-session average. 

Key supports at MA20, MA50 and MA100 were all breached, with the nearest significant support around the 1,580-point mark, which aligns with November's low. As a result, short-term demand may emerge at this support level, enabling the VN-Index to experience a technical rebound.

ACB Securities (ACBS) noted a strong downturn from a resistance level of 1,770 points, maintaining a consistent downtrend over several sessions with an increasing amplitude of declines. 

The market finished below the 1,650-point mark, as strong selling continued to dominate, particularly among Vin stocks and the banking sector, two critical drivers of the overall decline.

Looking ahead, as the downward trend persists without clear signs of stabilising, analysts suggest the VN-Index could continue to weaken, gravitating toward mid-term support at around 1,580 points.

Vietcombank Securities (VCBS) also pointed out that the VN-Index closed the week with a solid red candle and slightly increased liquidity compared to the 20-session average, indicating that selling pressure remains dominant. 

Technical indicators suggest ongoing downward momentum, reaffirming the current bearish sentiment in the market. 

As such, investors can expect a continuation of volatility in upcoming sessions, with anticipated support levels around 1,580 to 1,620 points, reflecting near-term historical lows. 

Bizhub