Vietnam Insight

▶ The VN-Index opened the trading session with a 4.32-point gap down following news of the conflict in the Middle East over the weekend. The VN-Index briefly recovered above the reference level during the session, but the recovery failed towards the end of the day due to strong selling pressure, despite strong support from foreign investors. Oil and gas and port stocks surged during the session due to uncertainties surrounding oil prices in the coming period.

▶ At the close of trading, the VN-Index fell sharply by 34.23 points (-1.82%), to 1,846.10 points; the HNX-Index fell by 3.82 points (-1.45%), to 259.00 points. Market liquidity increased significantly, exceeding the 20-day average, reaching 52.2 trillion VND, corresponding to 1,778 million shares traded. Foreign investors made net purchases of VND 767 billion today, with the largest net purchases in HPG, SSI, and MWG. Conversely, VCB, POW, and CTG were the stocks with the largest net sales.

▶ Technical perspective: Negative sentiment from weekend news triggered the early-session decline. Despite recovery efforts during the session, late-day profit-taking pressure pulled the index down to its lowest point of the day at 1,846 points, retreating to near the nearest support level around 1,820 points. The surge in trading volume indicates increased selling pressure, but there was still buying power absorbing the panic selling. Overall, this is seen as a necessary correction to consolidate the price base rather than break the trend. The 1,800-1,820 support level will be a crucial threshold to test demand before the market establishes a new equilibrium.

From a statistical perspective, we monitor the percentage of stocks trading above the 50-day moving average (EMA50) as an indicator to identify the market bottom. Historically, the VN-Index usually confirms a bottom when this percentage fluctuates between 30% and 40% and peaks around 60-70%. With current figures hovering around 40-45%, the data suggests there is still room for growth for most stocks.

In the base scenario: A rebound after retesting the 1,800 support level will head towards the short-term previous peak at 1,900. The necessary conditions for the market to maintain an uptrend are continued improved liquidity (with the participation of institutional investors) and a gradual spread of capital to other sectors.

In the negative scenario: The strong upward momentum with improved liquidity and market breadth indicates positive spillover effects, providing investors with a suitable stop-loss point in case the market receives unexpected negative news. Accordingly, in a negative scenario, if the VN-Index falls back to the previously accumulated sideways range around 1,600-1,700, investors may consider reducing their holdings to manage portfolio risk.

Strategy: Medium- to long-term investors can buy stocks that have not yet risen and have a solid accumulation base. However, when the index has risen sharply and entered a higher resistance zone, it is preferable to hold and be ready to take short-term profits rather than making new purchases, especially with stocks that move in line with the market.