Market likely to remain cautious this week due to weak sentiment

Market likely to remain cautious this week due to weak sentiment

The majority of shares continue to struggle amid below-average liquidity and defensive investor sentiment, said experts.

Investors watching the market's movements at a securities firm trading office in Hà Nội. — VNA/VNS Photo

The stock market recorded its first weekly gain after four consecutive weeks of declines, supported mainly by large-cap stocks.

However, subdued liquidity and the lack of broad-based participation continued to highlight the fragile nature of the recovery.

On the Hochiminh Stock Exchange (HoSE), the benchmark VN-Index closed last week at 1,824.53 points, up 1.84 per cent from the previous week and ending a four-week correction.

According to analysts at Saigon-Hanoi Securities (SHS), the market successfully tested the 2025 peak area around 1,780 points before rebounding and reclaiming the important psychological threshold of 1,800 points. 

Investor sentiment was also supported by positive developments surrounding peace efforts in the Middle East, easing oil prices and a more stable interest rate environment.

Despite the improvement in index performance, market liquidity remained relatively weak. Trading value increased 16.4 per cent compared with the previous week, but was still 22.4 per cent below the average level recorded over the past 20 weeks, suggesting that cash flow has yet to return decisively.

Foreign investors continued to be another notable factor. Last week, overseas investors sold a net 122 million shares worth approximately VNĐ2.86 trillion (US$109 million). Although the value of net selling eased slightly from the previous week, the market remained under sustained foreign outflows.

Looking ahead, securities firms maintained a cautious stance despite signs that short-term downside pressure had eased.

Vietnam Construction Securities (CSI) said the recovery was encouraging, but insufficient to confirm the start of a sustainable uptrend.

"Investors should remain patient and wait for stronger cash flow with broader participation across sectors, accompanied by clearer improvements in liquidity before considering a more aggressive buying strategy," CSI analysts said.

Pinetree Securities analyst Nguyễn Tấn Phong agreed, saying that the 'green outside, red inside' phenomenon would likely continue next week.

According to Phong, cash flow remains concentrated in a small number of large-cap stocks with individual growth stories, while the majority of shares continue to struggle amid below-average liquidity and defensive investor sentiment.

Geopolitical developments in the Middle East are expected to remain a key external variable influencing market sentiment. Investors are closely monitoring shipping activities through the Strait of Hormuz, as disruptions could directly affect oil prices, inflation expectations and global monetary policy.

He said rising geopolitical tensions and concerns over oil supply through the Strait of Hormuz could negatively affect global equity markets and spill over into Việt Nam during the first trading sessions of the new week.

Meanwhile, hawkish signals from the US Federal Reserve have strengthened the US dollar, putting pressure on the USD/VNĐ exchange rate and contributing to continued foreign selling.

According to Pinetree, a stronger dollar could also limit the State Bank of Vietnam's room to maintain accommodative monetary policies, creating additional challenges for the country's economic growth objectives.

In Asia, market participants are also watching the People's Bank of China's decision to keep interest rates unchanged, along with upcoming industrial profit and manufacturing data from the world's second-largest economy.

With liquidity still below historical averages and foreign investors maintaining their net-selling trend, market observers say the durability of the current rebound will require stronger confirmation from broader cash flow and improving trading activity in the weeks ahead. 

Bizhub