VN-Index closed the trading session on September 11 slightly below the 1,250-point mark, a slight decrease from the previous session and the third consecutive day of losses. Liquidity remained low, with trading value on the HoSE reaching just under VND 13,000 billion. Many investors were left disheartened by the lackluster trading activities.
A Lackluster Market
Prior to the September 2 holiday, the market had enjoyed a nearly two-week boom, recovering from below 1,200 points to surpass 1,280 points. Investors and analysts alike had high hopes for a post-holiday surprise, given the positive economic developments both domestically and internationally.
Contrary to expectations, the VN-Index has been stagnant and then witnessed a sharp decline after the holiday. During the September 11 session, the index dipped as low as 1,244 points before recovering slightly to close at 1,253 points. Notably, trading value on the HoSE, HNX, and UpCoM exchanges combined barely exceeded VND 13,900 billion, with HoSE accounting for VND 12,843 billion—a low figure for the past month.
Even positive news regarding the cooling USD/VND exchange rate, the expected Fed interest rate cut, and the removal of pre-funding requirements for foreign investors failed to boost market sentiment.
What’s behind the continued disappointment in the stock market? According to Truong Hien Phuong, Senior Director of KIS Vietnam Securities Company, it could be that the market lacks sufficient positive information to break out.
“In addition to persistent foreign net selling, market fluctuations in the accumulation range have left investors without wave-riding opportunities, and the absence of significant cash inflows. On the other hand, there are groups spreading negative information related to the business operations of certain large corporations and enterprises, which has had a significant impact on investor psychology,” Mr. Phuong analyzed.
Our reporters at NLD (Nguyen Lao Dong) Newspaper have observed that in the past few days, there has been less discussion, information exchange, and commentary on stock price movements within investor and stock enthusiast groups. Stock prices have dropped by 8-10% in the past two weeks, but many investors seem reluctant to buy.
The stock market’s persistent red ink has left investors disappointed. Photo: HOANG TRIEU
What Could Be the Big Catalyst?
In its September strategy report, SSI Securities Company (SSI Research) noted that an important development to watch is the upcoming circular related to foreign institutional investors being able to purchase securities without pre-funding. SSI Research expects this circular to be issued in September and implemented in the fourth quarter of 2024.
This is a basis for FTSE Russell to positively assess the Vietnamese stock market in the September ranking and decide on an upgrade for Vietnam in the September 2025 evaluation. This solution could encourage foreign investment funds to reconsider investing in Vietnam, along with shifting investment capital to emerging markets as the USD cools down.
“Historically, September could be a good buying opportunity, with expectations of market growth in the last quarter of the year. Favorable factors for the market are becoming more apparent compared to the previous period, including economic recovery, the government’s continued supportive monetary and fiscal policies, and listed companies’ profit growth prospects in the second half of the year, along with expectations of a gradual return of foreign capital,” added Hoang Viet Phuong, Director of SSI Research.
Sharing this view, Mr. Truong Hien Phuong also stated that a boost is needed, such as more positive Q3/2024 business results from listed companies, confirmation of a Vietnam market upgrade, and an official Fed interest rate cut, to attract investment capital.
Tran Khanh Hien, Director of Analysis at MBS Securities Company, opined that the impact of the global stock market correction on the domestic market will subside with the emergence of supportive news in September. Some Southeast Asian markets have bucked the global stock market trend as the USD has retreated to the beginning of the year.
The recently released August 2024 macroeconomic data provides investors with additional insights to assess the economic outlook and the picture of business results for enterprises in Q3/2024. “Bright spots from macroeconomic data such as inflation, manufacturing sector indices, foreign investment disbursement, and continued strong exports due to the recovery of global consumer demand, especially with the upcoming year-end holiday season. The cooling USD/VND exchange rate will be factors that help monetary policy still have room to support the economy in the coming time. VN-Index still has a positive outlook in September,” emphasized Ms. Hien.
Are Interest Rates and Bonds Competing with Stocks?
Some argue that the money flow into stocks is being competed away by other investment channels such as deposit interest rates, bonds, and real estate. However, KIS Vietnam’s expert disagreed, noting that recent data shows that many enterprises’ bond issuances have not truly recovered. Many investors are still cautious about investing in bonds.
“Deposit interest rates have increased, but the highest rate is only about 6.5-7%, which is not an attractive rate compared to stock investment. Even when deposit interest rates were 8-9% in the last quarter of 2022 and early 2023, it did not attract investors to switch to this channel.
Meanwhile, real estate is only vibrant in the apartment segment, while other segments are mostly observing and waiting. In fact, investors’ money is still in the stock market, but they are waiting for a breakthrough in the belief that the VN-Index will soar, so they are hesitant to invest,” said Mr. Truong Hien Phuong.
Empathy in the Face of Floods: $7 Billion Vietnamese Company Cancels Anniversary Celebrations
“With a steadfast focus on our team and community, we channel all our attention and resources towards fostering unity and support.”
