The VN-Index ended last week up more than 20 points, leading securities companies to be optimistic that the market will soon head towards the 1,100-point resistance level.
In last weekend's trading session, the Ho Chi Minh City Stock Exchange index maintained its positive momentum and closed at its highest level in four months – 1,090.84 points. Market liquidity also reached its highest level in six months with over 18,300 billion VND, an increase of nearly 5,000 billion VND compared to the previous session.
VNDirect's analysis team used the word "explosive" to describe the trading activity on June 2nd. The market, led by banking stocks, helped the VN-Index break through strong resistance around 1,080 points with high trading volume. This indicates that an upward trend is forming.
Overall last week, the VN-Index rose by more than 20 points, at one point reaching over 1,092 points. The market's sustained recovery was evident in each upward phase followed by corrective consolidation. According to statistics from Vietcombank Securities (VCBS), last week, the securities and chemical sectors attracted the strongest demand, with increases of 8.3% and 6.5% respectively.
These developments have led investors to enthusiastically discuss a new uptrend. In the short term, securities companies are also unanimously offering optimistic forecasts. VNDirect, VCBS, BIDV Securities (BSC), KB Securities (KBSV), and Saigon - Hanoi Securities (SHS) all say the market has the potential to rise and reach the 1,100-point resistance level in the coming sessions.
According to VCBS, the State Bank of Vietnam continues to reaffirm its monetary policy in response to the current context. In recent months, with the goal of stabilizing the exchange rate as inflation shows signs of slowing down, the State Bank has reduced its policy interest rates three times, bringing the average interest rate on new loans down by about 0.9% compared to the end of 2021. Therefore, this analysis team expects lending interest rates to have room for further reduction, although with a certain time lag.
Taking a more cautious approach, SHS believes that recent macroeconomic data remains a mix of positive and risky factors. The firm notes that the Purchasing Managers' Index (PMI) for May fell to 45.3 – the lowest level since September 2021 – as production and new orders declined sharply. This indicates that the impact of slowing global economic growth is negatively affecting domestic businesses.
Meanwhile, the government is actively implementing solutions to alleviate difficulties in the corporate bond and real estate markets, but these need more time to take effect. The rebound in personal consumer prices in the US in April has also increased concerns that the Federal Reserve (Fed) will continue to raise interest rates in mid-June.
"Given the nature of the market as one driven by expectations, it's possible for stocks to react earlier than they actually do," the firm stated.
From SHS's overall perspective, the market has shifted from a cautious to a positive state. In the short term, the VN-Index maintains a strong recovery trend towards the resistance level of 1,100 points and further towards around 1,150 points. This trend also creates expectations of a medium-term uptrend if the VN-Index continues to surpass the 1,150 point level. Conversely, the support level for the index will revolve around the 1,000-1,050 point area.
KBSV also believes that the VN-Index has a bright future, but will soon face renewed pressure and volatility as it approaches the significant resistance level around 1,100 points. Therefore, this analysis group recommends that investors take partial profits at high prices on stocks that have experienced strong rebounds from the bottom or are approaching significant resistance levels. Investors should only buy back a portion of their holdings during corrective sessions, returning to support zones afterward.
For short-term investors, according to KBSV's analysis team, it is still possible to take advantage of market corrections to increase stock holdings. VCBS, however, recommends only investing an additional 20-30% of the currently held profitable and available stock in the portfolio.
Tat Dat
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