On April 19, 2024, the VN-Index lost 18.16 points, dropping to 1,174.85, representing a decline of 1.52%. Over the previous three sessions combined, the market has shed more than 100 points, erasing the gains made over the past two months.
Easing of pressure on Vietnam’s stock market contingent on clear Fed stance
 Ms. Nguyen Hoai Thu – CEO of Investment Fund Management, VinaCapital
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Ms. Nguyen Hoai Thu – CEO of Investment Fund Management, VinaCapital commented that the global stock market on the morning of April 19, 2024, declined due to concerns over the conflict between Israel and Iran. However, the losses incurred thus far have been minimal. Simultaneously, major powers have urged both Israel and Iran to exercise restraint and cease military operations targeting each other’s territories.
In addition to the impact of the political conflict in the Middle East, investors in the Vietnamese stock market are also concerned about exchange rate fluctuations. Due to the US Federal Reserve’s (Fed) continued maintenance of high interest rates, the USD/VND exchange rate has risen sharply in recent days. Since the beginning of the year, the USD/VND exchange rate has climbed by more than 4%. These exchange rate fluctuations have posed significant challenges for the State Bank of Vietnam in managing its targets for interest rates, exchange rates, and inflation. In upcoming Fed meetings, if the Fed provides a clear roadmap for interest rate cuts, pressure on the exchange rate will ease for the Vietnamese stock market.
Rebound unlikely, market shows no signs of stopping its decline
Including the previous three sessions, the market has lost more than 100 points, erasing the gains made over the past two months. The lack of buying power to initiate a rebound has led to sustained selling pressure, causing continuous breaches of MA support levels. A representative of Shinhan Vietnam Securities Company (SSV) attributed this sharp decline to two factors.
Firstly, increasing pressure on the exchange rate. The USD Index (DXY) has shown signs of a sharp increase since the end of February, reaching 106 points today (April 19), (up more than 2% in the past week), putting considerable pressure on the domestic exchange rate. This level is similar to that observed in September last year when exchange rate pressure mounted, with foreign investors continuously selling off their positions. Since the beginning of the year, the free exchange rate has increased by 4.2%, putting pressure on Vietnam’s continued implementation of an expansionary monetary policy.
Secondly, the geopolitical tensions between Iran and Israel that erupted on the evening of April 13 acted as a catalyst, triggering a sharp 60-point drop on April 15, followed by a sustained decline in the market. This factor has simultaneously put pressure on global inflation, and investors are increasingly concerned that the Fed may not cut interest rates this year.
Additionally, coupled with the market’s vulnerability, numerous false rumors have contributed to theVN Index’s failure to hold the 1,250 level once again.
Currently, the market is trading at 1,180, corresponding to the strong support level of EMA 200. SSV anticipates that the VN-Index will undergo a period of accumulation within this range. Investors are advised to remain calm and take advantage of any rallies to reduce their stock exposure to safer levels. Rebounding is not recommended, as the market has yet to show any signs of stopping its decline.
Global stocks sell off, Dow Jones futures down over 1%, Nikkei 225 sheds over 1,200 points
