Vietnam Insight

▶ The VN-Index opened the trading session with an 8.18-point gain despite strong selling pressure at the end of the previous session. The VN-Index quickly succumbed to selling pressure after the gain, as negative sentiment stemming from the Middle East conflict at the end of last week continued to persist. Foreign investor support was absent in today's session. Oil and gas, port, fertilizer, and rubber stocks continued their impressive gains amidst the political conflict.

▶ At the close of trading, the VN-Index fell sharply by 32.96 points (-1.79%), to 1,813.14 points; the HNX-Index rose by 1.01 points (+0.39%), to 260.01 points. Market liquidity increased significantly, exceeding the 20-day average, reaching 48.4 trillion VND, corresponding to 1,508 million shares traded. Foreign investors net sold 782 billion VND today, with the largest net selling value in HPG, VHM, and VNM. Conversely, VPB, SSI, and DCM were the stocks with net buying.

▶ Technical perspective: Negative sentiment stemming from Middle Eastern political instability persisted for the second consecutive session of the week. Compared to the previous session, the recovery efforts recorded today were weaker, with strong selling pressure pushing the index to close near the 1,800 support level at 1,813 points. The surge in liquidity indicates increased selling pressure, but there was still buying power absorbing the panic selling. Overall, this is considered 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.