Stock liquidity remains weak, waiting for bottom-fishing cash flow from investors

Stock market liquidity remains weak, awaiting bargain-hunting from investors. — The market is expected to experience a surge in liquidity. Photo: Gia Mieu

Although the market has shown more optimistic signs when the selling pressure has disappeared, the general index has gradually recovered, even increased well, but to confirm that it has found a balance point, almost the entire market assessed that it has not. Therefore, the first morning trading session of October continued to be in a state of stagnation.

With the general index fluctuating within a narrow range around the reference point, the focus of investor attention remains on liquidity. This is the sixth consecutive session with lower trading volume compared to the previous one. Yesterday's session (October 2nd) even saw a significant drop in trading value on the HSX exchange, reaching approximately 11.5 trillion VND – the lowest level in the last five months. Yesterday's trading volume was also sharply lower than the 20-day average. The lack of liquidity suggests that the two recent upward sessions lacked the momentum for a breakout, meaning the upward trend is still more of a technical rebound.

Macroeconomic factors support a scenario where the market will soon recover, while technical factors require further analysis during the first trading week of October to determine the trend. From a macroeconomic perspective, the exchange rate is currently high, although lower than in 2022. However, in 2023, the State Bank of Vietnam's position will be strengthened by the addition of foreign exchange reserves in the early months of the year. In addition, low interest rates are a supporting factor for the stock market, and the State Bank of Vietnam is unlikely to raise interest rates until the end of 2024.

The sharp decline in the market is mainly due to the impact of negative news on investor sentiment, pressure from margin debt, portfolio restructuring to lock in the net asset value of investment funds, etc. The government is combining monetary and fiscal policies to support the economy . Therefore, ignoring short-term technical factors, this is a good buying opportunity for the year-end target.

With the current developments, the index is likely to have a big fluctuation session this week to confirm whether it can continue to recover or not. Experts from TVSI Securities Company still maintain the view that the index is forming a horizontal accumulation zone around the current 1,150 point area to form a new price base and continue to recover. The strong resistance that the index is aiming for in the forecast recovery is the convergence area between the 50-session average line and the short accumulation zone before falling around the 1,200-1,215 point area.

Yuanta Vietnam Securities Company believes that the VN-Index may fluctuate around the 100-session moving average and the market may still be able to return to a downward trend in the next session. In general, investors are still worried about the current market developments and the market is still in the technical recovery phase. It is worth noting that weak demand has prevented the market from recovering strongly, so Yuanta experts are still hesitant about this recovery phase when there is no safe buying point.

In line with this view, Vietcombank Securities Company (VCBS) noted that although the overall market is still volatile and the short-term trend is unclear, differentiation remains evident, with investors seeking out individual stocks. They recommend that short-term investors take advantage of upward movements to restructure and consolidate their portfolios, or consider short-term trading with a low allocation of 10-25% of their account for stocks in sectors showing better recovery prospects than the market.

Source