Vietnam Insight

▶ The index opened the trading session with a sharp gap down of 9.40 points, continuing the strong selling pressure from the end of the previous session. The VN-Index continued to face strong selling pressure due to the prevailing negative sentiment stemming from the Middle East conflict and the heavy selling pressure across Asian stock markets. Despite strong selling pressure from foreign investors today, strong domestic investor demand helped the VN-Index recover and close above the reference level. However, the money flow has not yet spread, and the market breadth is strongly skewed towards the downside.

▶ At the close of trading, the VN-Index increased by 5.13 points (+0.28%), reaching 1,818.27 points; the HNX-Index decreased by 2.16 points (-0.83%), to 257.85 points. Market liquidity increased sharply, exceeding the 20-day average, reaching 53.0 trillion VND, corresponding to 1,825 million shares traded. Foreign investors net sold VND 1,683 billion today, with the largest net selling values in FPT, POW, and VHM. Conversely, VCI, DCM, and VCB were the stocks with net buying.

▶ Technical perspective: The market experienced a volatile session with a decline of over 45 points at times. Despite selling pressure driving a surge in liquidity, bottom-buying demand at low price levels helped the index recover significantly, forming a candlestick with a long lower wick and holding firm against the MA20 line. Overall, this is considered a necessary correction to consolidate the price base rather than break the trend. The support level of 1,800 – 1,820 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 the current figure at around 40-45%, the data suggests that there is still room for growth for most stocks.

In the base scenario: The market rebounding 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 the gradual spread of capital to other sectors.

In the negative scenario: The strong upward momentum with improved liquidity and market breadth indicates positive spread, creating a suitable stop-loss point for investors should the market receive unexpected negative information. Accordingly, in the negative scenario, if the VN-Index falls 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 into sectors that have not yet risen and have a solid accumulation base. However, when the index has risen sharply and entered higher resistance levels, 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.