Vietnam Insight

▶ The index opened the trading week with a sharp gain of 35.17 points following news of easing tensions in the Middle East. US President Donald Trump extended the negotiation period to 5 days from 2 days, and oil prices immediately corrected to the USD100/barrel mark. The market rallied across most sectors. However, the market recovered with relatively limited liquidity despite the index regaining the 1,600 support level. Simultaneously, the market's recovery faced resistance from foreign investors, who had been net sellers for nearly 10 consecutive sessions.

▶ At the close of trading, the VN-Index increased by 23.60 points (+1.48%), reaching 1,614.77 points; the HNX-Index increased by 6.27 points (+2.64%), reaching 243.81 points. Market liquidity in the recovery session saw a sharp decline, falling below the 20-day average to 22.2 trillion VND, corresponding to 876 million shares traded. Foreign investors continued to net sell 582 billion VND today, with the largest net selling value in VIC, MWG, and VHM. Conversely, BSR, VCK, and VCI were the stocks that saw net buying.

▶ Technical Perspective: Trump's decision to extend the deadline and signal positive progress in negotiations with Iran has supported the recovery of global markets. The VN-Index opened higher, recording a technical rebound after two sessions of sharp declines to oversold territory. Overall market developments are in line with our expectations; however, the recovery remains cautious, with low liquidity and not yet fully offsetting the previous losses. The index has recovered to the 1,600 mark (RSI is at 32) after testing the important support zone around 1,580. Unless there are negative developments from the Middle East, we expect the market to continue its recovery in the coming sessions, aiming towards the MA200 line. Conversely, if it fails to maintain momentum and break above this level, the risk of a correction will increase.

From a statistical perspective, we track the percentage of stocks trading above their 50-day moving average (EMA50) as an indicator to identify market bottoms. Historically, the VN-Index typically confirms a bottom when this percentage fluctuates between 30% and 40%, peaking around 60-70%. With the current figure at around 36%, the data suggests that many stocks have declined significantly recently.

In the underlying scenario: The VN-Index is expected to hold the 1,580-point support level in the short term as investors await clearer signals regarding the easing of geopolitical tensions. If tensions ease, pressure on global oil prices may decrease, opening up the possibility of the Fed resuming interest rate cuts sooner. This could improve risk sentiment in the market and support the stock market.

In a negative scenario, prolonged disruptions in the Strait of Hormuz could further tighten global oil supply, keeping oil prices high for an extended period. This scenario increases the risk of stagflation (high inflation coupled with low economic growth). Historically, such environments are often unfavorable for the stock market and could lead to a deeper correction in the VN-Index. If the market continues to decisively lose the 1,580 support level, accompanied by weak recovery sessions, the downtrend could be further strengthened.

Strategy: Investors may consider investing in segments during market dips; however, given the uncertain geopolitical situation, we recommend maintaining a moderate proportion of stocks to manage risk. During this period, priority should be given to sectors benefiting from domestic factors such as public investment, banking, and construction materials. At the same time, dips caused by cross-margin call pressure can create buying opportunities at attractive prices.