Negative sentiment prevailed in the market amid pressure from the highest exchange rate since the beginning of the year, stemming from US government bond yields approaching 5%, the highest in 18 months. This development triggered a sell-off since the beginning of the week, causing sectors to decline across the board. The domino effect of forced selling further prolonged the decline in subsequent sessions.
At the end of the week, the VN-Index still recorded a decrease of 46.7 points, equivalent to a 4.0% drop compared to the end of the previous week. At the same time, the HNX-Index decreased by 4.4% to 228.5 points and the UPCoM-Index decreased by 2.6% to 85.6 points.
Concerns among investors kept liquidity low. Trading value across the three exchanges recovered only slightly this week, averaging 18,516 billion VND per session, a 12.5% increase compared to the previous week.
Foreign investors returned to net buying across all three exchanges, with a value of VND 779 billion on HoSE, VND 117 billion (down 23.6% compared to the previous week) on HNX, and VND 12 billion on UPCoM. In total, foreign investors net bought VND 909 billion across the entire market last week.
Mr. Dinh Quang Hinh - Head of Macroeconomics and Market Strategy Department, Analysis Division, VNDIRECT Securities Company, and Mr. Bui Khoa Bao - Head of Investment Department, VPS Securities Company, both stated that further information and signs indicating whether the market has bottomed out are needed.
Market liquidity compared to the previous month.
Reporter: Although a market recovery was expected, the VN-Index still recorded a 4% decrease last week compared to the end of the previous week . Can you explain the reasons for this market performance and what are your forecasts for the market in the coming trading week?
Mr. Dinh Quang Hinh: Contrary to expectations that the recovery momentum could be maintained for a second consecutive week, the Vietnamese stock market recorded four consecutive sharp corrections last week and only partially recovered in Friday's trading session.
Strong selling pressure often appears unexpectedly in the afternoon session, catching investors off guard and negatively impacting market sentiment. This could be due to proactive margin calls or margin calls by some lenders.
Therefore, further observation of the impact of this development on market trends in the coming sessions is needed. A positive point that emerged in the last session of the week was the beginning of some information supporting the exchange rate.
Specifically, in his recent speech on monetary policy, Fed Chairman Jerome Powell signaled that he may continue to halt interest rate hikes at the upcoming meeting in early November. This could curb the recent sharp rise in US government bond yields.
In addition, VPBank's completion of a private placement of shares to Japanese investor SMBC worth $1.5 billion will contribute to supplementing the supply of foreign currency. At the same time, the continuous net buying by foreign investors during last week's declining sessions is also a notable supporting factor for the market.
Mr. Bui Khoa Bao: I expect a rebound when the market experiences large intraday fluctuations and liquidity increases. The reason is that the current market has already fallen enough to shake out all margin positions, so a massive sell-off (washout) is unlikely to occur.
The important thing to see at this moment is the phenomenon of "investor turnover" by creating an exchange of expectations between those who are discouraged by losses and have lost faith in the stock market and those who participate in the VN-Index because the market has fallen deeply to a cheap and attractive price level for long-term investment capital.
Therefore, determining how far the market will fall and where the equilibrium point will be remains to be seen, requiring further signs of a bottoming out. However, given the sharp decline over four consecutive sessions, I believe a recovery session at the end of the week doesn't necessarily mean anything. Therefore, investors should prioritize trading their existing stocks and using short-term trading (T0) to lower their average cost and recover more quickly when the market rebounds.
Market valuation over the past year (Source: Fiintrade).
Reporter: In a market where trends are unclear, investor sentiment becomes even more cautious. In your opinion, what is the most important investment strategy needed right now?
Mr. Dinh Quang Hinh: Regarding investment strategy, long-term investors can consider gradually accumulating shares during downward corrections, as the market has reached a fairly attractive valuation level for buying and holding.
With interest rates at multi-year lows and listed companies beginning a recovery cycle, buying and holding stocks for long-term investment is a worthwhile option. For short-term investors, however, maintaining discipline and waiting for the market to successfully confirm a second bottom before participating is advisable to minimize risk and increase the probability of success.
Mr. Bui Khoa Bao: In my opinion, investors should implement a two-part strategy. For those who are holding a large proportion of stocks, the priority should be to resolve losses through T0 trading.
At this stage, investors should buy at the bottom, trade to reduce their average cost, and maintain their current portfolio weighting. Absolutely do not average out your holdings because most of the stocks people are currently holding are those that have experienced rapid price increases and led the previous wave, such as real estate and securities stocks. Typically, a group of stocks cannot lead two consecutive cycles.
Investors who exited early and are still holding cash should prioritize testing the waters, allocating small amounts to promising stocks. The main reason is that it's impossible to know where the peaks and troughs are until they've passed.
Conversely, investors must also understand that the market has already fallen 14% from its peak of 1,250, so this price range is certainly not a risky zone. Just have faith in the market, look at the long term, and be prepared for a strong rebound that could happen at any time .
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