The stock market has been positive in the final trading session before the holiday break. The optimistic sentiment has spread across different stock groups, resulting in a more than 10-point increase in the overall index. Looking at the bigger picture, the VN-Index has recorded its third consecutive month of growth, thanks to improved domestic capital flow and reduced pressure from foreign investors.
Compared to its lowest point in November 2023, the VN-Index has made a recovery of approximately 17% to return close to the 1,200-point mark. This is the highest level of the index in nearly 5 months, since the end of September last year. It’s worth noting that the comeback of the banking sector is a key factor driving the index’s upward trend, while other sectors are cooling down.
Normally, the market tends to be sluggish before the Lunar New Year holiday due to investors taking profits and withdrawing funds for the holiday expenses. So what is causing the continuous surge of the VN-Index in recent times?
Mr. Nguyen The Minh – Director of Securities Analysis at Yuanta believes that the market’s upward momentum can be explained by several reasons.
Firstly, the comeback of the banking sector. Investors are optimistic about the commercial banks’ business results due to the credit growth story and the resolution of real estate debts. In addition, the expectation of economic recovery also supports the banking sector. However, the upward trend of this sector is still based on expectations, so it needs to be closely observed.
Secondly, investors have a positive outlook for 2024, with the expectation that the global interest rate environment will cool down. Accordingly, the Fed has signaled a rate cut, and the weakening of the USD and other currencies is a supportive factor for capital flows into the stock market in 2024.
Thirdly, the global economic recovery. Currently, investors have low expectations for the occurrence of a major crisis or recession, but a high possibility of economic recovery. The US stock market and Asian markets have also shown positive signs recently, reflecting the positive sentiment of investors.
Fourthly, the domestic economy is also expected to recover through positive measures from the Government to promote credit growth, boost public investment, and attract FDI inflows.
Similarly, Mr. Dinh Quang Hinh – Head of Macroeconomic and Market Strategy Department at VNDirect Securities, stated that some investors have a “early Lunar New Year break” mentality and sell stocks to cash out. However, on the other hand, many investors take advantage of the opportunity to accumulate stocks, preparing for the post-Tet period. This helps create a lively trading atmosphere before the Lunar New Year period.
Especially, the market’s recent uptrend has been supported by positive domestic macroeconomic indicators such as the PMI index crossing the 50-point threshold for the first time in 5 months, the IIP industrial production index and export-import growth being positive in January 2024. Inflation and interest rates maintain a downward trend.
At the same time, the recent uptrend of the exchange rate has shown signs of ending, helping to alleviate the psychological pressure on a portion of investors. Accordingly, experts believe that domestic capital (especially individual investors) will return to the stock market strongly after the holiday break, pushing stock indices up.
Therefore, instead of waiting until after the holiday to invest, wise investors have taken advantage of pre-Tet correction sessions to accumulate stocks at discounted prices, focusing on stocks in sectors with supportive fundamental information such as banking, securities, and retail.