Specifically, the VN-Index fell sharply in the first two sessions of the week, then recovered technically in the last sessions of the week with reduced liquidity. This week, BCM (+6.9%), MSN (+4.2%) and VIC (2.1%) were the main codes supporting the market. On the contrary, HVN (-20.1%), BID (-3%) and CTG (-4%) were the factors putting pressure on the index.
Liquidity decreased by 17% compared to last week. Foreign investors unexpectedly returned to net buying, but mainly through agreement buying, while they continued to net sell more than 400 billion in matched orders.
Commenting on the market trend in the new week, experts have a cautious view in the context of the sharp decline in the main index and the decrease in liquidity during the adjustment of VN-Index. However, according to experts, the market still has many opportunities and the story is to choose the right stock code for the next 6 months.
Start building a portfolio for a 6-12 month horizon
In the opinion of grandfather Dinh Quang Hinh – Head of Macro and Market Strategy Department, VNDIRECT Analysis Division, VN-INDEX shows signs of forming a short-term bottom and recovering after reaching the lowest point of 1,218 points in the last trading week. It is worth noting that selling pressure has weakened significantly while buying pressure has shown signs of slight improvement in the last trading sessions of the week.
Moving into the next trading week, the market trend may be confirmed when important information is about to be announced, including domestic macro data for July, the Fed's updates at the end of July meeting on the interest rate cut roadmap, especially the deadline for announcing Q2 business results reports of listed enterprises.
In the base scenario, VNDirect experts expect the VN-Index to build a foundation and accumulate again in the 1,230-1,260 point range in the coming trading week. With market valuations now at a more attractive level, medium- and long-term investors can “start building a portfolio for the next 6-12 months”, focusing on a number of sectors with improved business prospects such as banking, consumer-retail and import-export.
Conversely, short-term traders need to wait for the market to “confirm the short-term trend” and “improve cash flow” before increasing their stock holdings.
Short term trend turns bearish, A “V” shaped recovery scenario is unlikely,
According to Mr. Nguyen Anh Khoa, Head of Department - Agriseco Securities Research, the selling pressure in the decline mainly came from domestic individuals. VN-Index has recovered after reacting to the 1,220 point area, however, the short-term trend has become bearish and selling pressure may increase again when VN-Index gradually moves towards the 1,250 (+-5) point area in the coming sessions. Mr. Khoa believes that the scenario of a "V" shaped recovery that some investors in the market expect is unlikely to happen, especially in the context of strong selling pressure from individual investors as it is now.
The decline in liquidity during the VN-Index's correction period shows the cautious sentiment of the market. Investors have high expectations for a more positive economic outlook and continued profit recovery in the second quarter of 2024. In addition, after the recent market correction, the VN-Index is in a technical recovery phase and the next trend has not been clearly determined, which has also caused investors to lack the motivation to increase disbursement in the current period.
According to experts from Agriseco, investors can expect a reversal of foreign capital flows to take place soon thanks to the FED lowering its operating interest rate in September, helping to narrow the interest rate gap and reduce pressure on exchange rates; VN-Index adjusting to bring market and stock valuations to a reasonable range that can attract foreign investors' cash flow.
Regarding the ongoing financial reporting season, businesses are gradually revealing their Q2 business results. Up to now, nearly 600 listed businesses have announced their financial statements or provided estimates for Q2/2024 business results. Of which, net profit increased by 21.61% YoY, higher than the growth rate of 16.71% YoY in Q1. This is a positive signal showing that the economy is continuing to recover, reflecting in the business results of businesses.
However, there is a clear differentiation between industry groups and this differentiation may continue in the third quarter and the second half of 2024 when the low base factor of the same period is no longer present. Therefore, choosing and finding investment opportunities will need to be done carefully.
Currently, the market has just undergone a correction phase, bringing the VN-Index to the lower boundary of the accumulation price channel, thereby bringing the valuation of many stock groups to a more reasonable area for disbursement. Mr. Khoa recommends that investors can open buying positions during the market correction phase, prioritizing the banking group and the VN30 group, focusing on leading stocks when the market price has been deeply discounted.
The story revolves around choosing the right stock code for the next 6 months.
More positively, Mr. Bui Van Huy - Director of DSC Securities, Ho Chi Minh City branch, assessed that the domestic and global contexts were not too worrying. The world stock market fluctuated somewhat, but mainly due to profit-taking from technology stocks and flows to other groups of stocks. Inter-market factors were not too worrying.
Similarly, domestic factors are probably not too worrying. Last week showed that foreign transactions seem to be gradually rebalancing. Regarding outstanding loans for margin trading, although the absolute number is at a record high, as someone working in the industry, I see that the supply capacity of many securities companies after a series of capital increases is still very large. At the same time, as mentioned many times, securities companies are currently replacing part of the lending function of banks, so the absolute number is at a record high but the risk is not high.
The VN-Index recovered slightly at the end of the week and maintained the 1,240 point level, but many strong stocks surpassed their 3-6 month peak. This shows that cash flow is not leaving the market, but rotating into stocks with good fundamentals, positive Q2/2024 business results and growth potential in the last 6 months of 2024. According to Mr. Huy, the question is not whether the VN-Index will recover or not, but the story of choosing the right stock for the next 6 months.
“I look forward to the possibility recovery for Vietnam–Index, although next week market will have to face whether liquidity returns or not. Threshold 1.240 is relatively important at this time and if next week the market holds above the above threshold and liquidity gradually returns, market sentiment will be more stable after the events.“, Mr. Huy shared.
Highlights of the first half of 2024 financial reporting season highlight the clear differentiation between businesses in the same industry group. Industry groups that have recovered with the economy and have increased profits compared to the same period include retail, textiles, rubber, banking, fertilizer, steel, and water transport. The highlight is that the banking industry group has maintained a fairly good profit growth rate, despite the difficulties predicted in advance.
There were also many disappointments in the “Non-financial” group such as some construction real estate enterprises, some securities companies, etc. and there were also enterprises reporting losses, but in general, the second quarter business results season is still in line with expectations and shows a recovery in profits of listed enterprises.
Source: CafeF
