Vietnam Insight

▶ The index opened the trading session with a gap down of 11.89 points, continuing the correction from the previous session. The market's recovery weakened as oil prices continued to remain at around USD100/barrel. Selling pressure weighed heavily on the index throughout the trading session, despite moments of recovery above the reference level. The index closed below the 1,700 support level, with selling pressure from foreign investors.

▶ At the close of trading, the VN-Index fell 13.37 points (-0.78%) to 1,696.24 points; the HNX-Index fell 2.01 points (-0.81%) to 245.84 points. Market liquidity continued to decline during the correction, falling below the 20-day average, at 30.0 trillion VND, corresponding to 1,217 million shares traded. Foreign investors net sold 397 billion VND today, with the largest net selling value in BSR, VIC, and SSI. Conversely, KDH, VNM, and MSN were the stocks with net buying.

▶ Technical perspective: The market continues to face downward pressure and is fluctuating around the 1,700 point mark. Strong divergence is occurring, with the oil and gas sector experiencing a limit down. Market liquidity remains relatively low, indicating weakening selling pressure; however, demand remains cautious amidst numerous uncertainties. The short-term trend remains downward in an attempt to find equilibrium. The market is likely to continue fluctuating in search of a new equilibrium point, with 1,700 points acting as resistance and 1,650 points as support.

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: Short-term investors should prioritize staying out of the market because the risk factors are very difficult to predict. With medium-term positions bought at low prices, investors can confidently hold positions in sectors such as steel and banking, but with moderate weighting.