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Exchange rate and gold have not cooled down, cash flow into stocks continues to decrease

VietNamNetVietNamNet15/10/2023


Foreign investors net sell, liquidity decreases

The stock market surprised many people in the last session of the week (October 13) when it turned around and increased in the afternoon session despite being under strong selling pressure for most of the trading session with red dominating the entire session.

The recovery of some large-cap stocks at the end of the session such as Sabeco (SAB), VPBank (VPB), HDBank (HDB), Vincom Retail (VRE)... along with the breakthrough of some codes VietJet (VJC), Mobile World (MWG), Rubber Industry Group (GVR)... helped the stock market reverse.

At the end of the week on October 13, the VN-Index increased by 3.12 points to 1,154.73 points.

However, this is considered a "green skin, red heart" session. The VN-Index increased but most stocks decreased in price. Foreign investors continued to net sell.

During the week, the VN-Index increased by 26.2 points (+2.3%) compared to the end of last week. The HNX-Index even increased by 3.7% to 238.1 points. The Upcom-Index increased by 0.8% to 87.9 points.

Returning to the first session of the week on October 9, the market maintained a positive sentiment after the USD's downward adjustment in the international market. However, after the US Department of Labor announced that the US core CPI increased higher than expected on Wednesday evening, the DXY index increased again and put pressure on the market in the last two sessions of the week.

Surprisingly, at the end of the week, the VN-Index was pulled up and closed up thanks to large and mid-cap stocks.

Some real estate stocks broke out. Phat Dat Real Estate (PDR) hit the ceiling in the session of October 13 after information about the approval of the 1/500 planning of the entire VND10,000 billion project. The heat spread to other stocks and stock groups. Khang Dien House (KDH) also hit the ceiling.

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Cash flow into the stock market has decreased. (Photo: HH)

During the week, some stocks contributed to the general market's increase, including: Rubber Industry Group (up 5.9%); VPBank (up 4.8%), Hoa Phat (up 3.2%), Vietcombank (up 1.4%)...

Market liquidity continued to be low with the average total trading value per session reaching VND16,459 billion, down 4.2% compared to the previous week. Foreign investors net sold VND1,911 billion on HOSE, up nearly 5 times compared to the previous week. On all 3 exchanges, foreign investors net sold VND1,816 billion.

Domestically, the price of gold at the end of the week skyrocketed to a historic peak, over 71 million VND/tael (selling price). The exchange rate was also very high, over 24,600 VND/USD (selling price). The free USD rose to over 24,700 VND.

Where is the big money going, is the exchange rate pressure worrying?

According to many experts, the recent net selling by foreign investors (more than VND9,000 billion since the beginning of the year) is due to the strengthening of the USD globally. In Vietnam, since mid-August, the USD/VND exchange rate has increased rapidly again, thereby causing foreign investors to withdraw money even faster.

Besides, the cash flow of domestic investors also shows signs of decline following the decline in liquidity in the stock market.

Mr. Bui Van Huy, Director of DSC Securities Corporation, Ho Chi Minh City branch, commented that in the current period, large cash flows are focusing on primary assets with the expectation of much higher profits than the secondary market. Many large groups also have to devote resources to solving problems related to themselves.

In 2022, the situation where organizations had to spend money, turn money (including selling stocks/having stocks liquidated) to solve financial imbalances... made the Vietnamese stock market one of the markets with the sharpest decline. Many stocks fell by 80-90% such as Novaland (NVL), DIC Corp. (DIG), Hai Phat (HPX)...

The bond issue has seen positive developments in 2023, but in reality many debts have been extended and pushed into the future, at the end of 2023 and 2024.

For the banking system, bad debt pressure is also great when the deferral policies expire. Banks are having to set aside bad debts and need to handle them immediately.

Although cash flow is still weak while the USD/VND exchange rate is still unpredictable, there are still many positive forecasts for the stock market.

Mr. Dinh Quang Hinh, Head of Market Strategy Department, Analysis Division, VnDirect Securities Company, said that investor sentiment has become less pessimistic and gradually stabilized with positive signals of change in the stock market last week.

The recovery was maintained despite some negative information being released such as higher-than-expected inflation in the US and the increase in exchange rates and domestic gold prices showing no signs of cooling down.

Mr. Dinh Quang Hinh also affirmed his view that the current exchange rate pressure is only temporary and will not reverse the downward trend of deposit and lending interest rates.

According to this expert, in the context that the mobilization interest rate has decreased very deeply and reached the bottom level of the Covid-19 period and other investment channels such as real estate and corporate bonds are still facing many difficulties, the stock investment channel will still be the priority choice of current cash flow.

In the coming weeks, the stock market will be supported by the announcement of the third quarter 2023 business results of listed companies.

According to VNDirect, the business results picture for the third quarter of 2023 will have more positive changes compared to the first two quarters of the year and will be a supporting factor for market trends.

Cash flow disappeared, stocks unexpectedly increased at the end of the session . Cash flow continued to decline in the stock market even though VN-Index has approached the mid-term support zone and there are many more positive signals coming to the economy.


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