Vietnam Insight

▶ The index opened the trading session with a sharp drop of 83.90 points on the first day of the week due to concerns about the continuing conflict in the Middle East. Over the weekend, the US and Israeli attack on Iranian oil production and storage facilities exacerbated tensions, with WTI oil prices at one point rising to USD120/Bbl. Negative sentiment and sell-offs occurred on most Asian stock exchanges. The Vietnamese stock market was no exception, with sell orders at the floor price persisting throughout the session and no significant recovery. The VN-Index recorded its sharpest decline in history.

▶ At the close of trading, the VN-Index fell 115.05 points (-6.51%) to 1,652.79 points; the HNX-Index fell 18.28 points (-7.21%) to 235.36 points. Market liquidity remained high, exceeding the 20-day average at VND 46.1 trillion, corresponding to 1,637 million shares traded. Foreign investors continued to net sell VND 348 billion today, with the largest net selling values in VHM, FPT, and STB. Conversely, MWG, VNM, and BSR were the stocks with net buying.

▶ Technical Perspective: The market experienced a sharp decline from the start of the session, with many stocks hitting their lower limit and showing no signs of recovery. High liquidity, weak demand, and overwhelming selling pressure caused the index to fall sharply. The VN-Index has temporarily dropped more than 13% from its recent peak, almost equivalent in percentage terms to the impact of the tariff news. Technically, short-term risks prevail as the VN-Index lost the 1,750 support level and retreated to the medium-term MA200 support level at 1,630. The market is likely to continue fluctuating around the 1,630 support level to retest demand and gradually form a bottom around this area.

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 typically confirms its bottom when this ratio fluctuates between 30% and 40%, and peaks around 60-70%. With the current figure at 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 the 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: Short-term investors should prioritize staying out of the market because the risk factors of the conflict are very difficult to predict. For medium-term positions bought at low prices, investors can confidently hold positions in sectors such as steel and banking, but with moderate weighting.