The first five trading sessions of July witnessed a positive market trend, with a total increase of almost 38 points to the 1,283 mark. Meanwhile, the average liquidity of the three exchanges reached nearly VND 16,700 billion/session, a decrease of more than 30% compared to the previous week, indicating investors’ caution.
Commenting on the market outlook for the coming week, experts believe that the current context leans towards positivity, despite occasional fluctuations. Investors can confidently select sectors that are expected to benefit and demonstrate robust financial performance.
According to Mr. Bui Van Huy, Director of DSC Securities – Ho Chi Minh City Branch, market factors are transitioning to a relatively supportive stance for the domestic market. Major stock markets are either maintaining an upward trajectory or forming short-term bottoms, with the S&P 500 and Nasdaq indices reaching new highs. Meanwhile, yields on US government bonds, particularly the DXY index, declined significantly following Fed Chair’s appreciative remarks regarding the fight against inflation last week.
Domestically, the recently published macroeconomic data indicates a positive economic recovery. The latest credit growth data for the first six months met the set plan. Production, retail consumption, import-export, and credit all show positive signs.
Mr. Huy believes that the current context leans more towards positivity than negativity, as the worst news is likely behind us. Since the short-term bottom in June, the market has recovered by more than 40 points, but the increase in stock prices has been modest, resulting in limited selling pressure. He leans towards a bullish scenario, anticipating the market to continue its upward trend towards the June peak, albeit with some fluctuations. A negative scenario would unfold if the recovery falters and the market falls below the 1,270-point threshold, which is considered a critical support level.
It is typical for market liquidity to be low at the beginning of an upward trend, especially after a significant correction. According to the DSC expert, it is unreasonable to expect buyers to be confident and enthusiastic while sellers gradually run out of stocks and hesitate. Historical data also supports this observation, as liquidity tends to be low at the beginning of recent upward trends, gradually improving as the trend becomes more apparent.
Currently, foreign investors account for less than 20% of trading value, significantly less influential than in previous periods. Mr. Huy cannot pinpoint when foreign investors will resume net buying, but he predicts a likely slowdown in the remaining period of July and the third quarter of 2024.
Foreign investors’ trading ratio on the stock market
Given the published macroeconomic picture, Mr. Huy expects that enterprises’ business results in the second quarter of this year will recover and grow broadly. Therefore, most sectors are expected to benefit and demonstrate improved financial performance.
The expert is confident about the economic recovery and expects robust recovery sectors to correspond to large fields such as production, retail, consumption, import-export, and credit. Within these sectors, there will be smaller industry groups with varying degrees of recovery, providing investors with diverse options.
“With an objective perspective, I believe we should face the context head-on. By doing so, we can avoid being influenced by unfounded fears or excessive optimism. The current context is relatively supportive, and while risks are always present, they are not overly significant. Investors can consider participating in the short term to seize market opportunities and take advantage of the upcoming earnings season. Looking further ahead, there are expectations for Vietnam’s upgrade in the FTSE in September 2024”, Mr. Huy recommended.
(“+” indicates sectors expected to maintain growth in the second quarter of 2024)
Investor sentiment is impacted, and the market continues to fluctuate
Mr. Nguyen Anh Khoa, Head of Agriseco Securities Research, assessed that the point gain range narrowed gradually as liquidity improved, indicating that selling pressure resurfaced as the index approached the resistance zone. In the context of a lack of proactive buying power, the market is likely to continue fluctuating within a narrow range of around 1,280 (±5) points in the early sessions of the coming week.
According to Mr. Khoa, the market is approaching a strong resistance zone that the index has been unable to decisively break through since the beginning of the year. Additionally, considering some historical statistics, the market typically experiences two upward waves in a calendar year, pushing the index to higher levels. In the first half of 2024, there have already been two upward waves, so investor sentiment may be influenced by this factor.
In a context where the market is rising but there is no synchronization among stocks within the same sector, the differentiation process is still taking place. Therefore, the short-term strategy should focus on portfolio restructuring, reducing the proportion of speculative stocks as the index recovers towards the resistance zone, and gradually building a portfolio for the third quarter, focusing on individual stocks with specific growth prospects and high reliability. Some sectors expected to demonstrate strong financial performance are retail, steel, exports, and information technology.
Regarding foreign capital in the market, in the first six months of 2024, foreign investors net sold nearly VND 52,700 billion, equivalent to approximately 87% of the record net withdrawal value set in 2021. The ownership ratio of foreign investors in the total market capitalization also decreased to below 16.5%, a nearly 2% decline compared to the beginning of the year. The pace of net selling has slowed down in the first sessions of July, as the Ishare ETF fund completed its stock sale and liquidation process. However, there is no basis to assert that the net selling trend of foreign investors will soon reverse in the short term in the middle of next week or next month.
However, with domestic interest rates gradually rising, the Agriseco expert expects the pace of foreign investors’ net selling to weaken in the coming period. Additionally, the expectation of the Fed’s reversal of monetary policy in the third quarter and the market upgrade in the medium and long term are anticipated to attract foreign capital back into the market.
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