Vietnam Insight

▶ The index opened with a sharp gain of 19.38 points following news of easing tensions in the Middle East. Brent crude prices corrected below USSD100/barrel, improving market sentiment. To address the supply and energy security concerns in the coming period, the government has accelerated bidding for large-scale power transmission projects and is considering implementing several large-scale power generation projects. Power sector stocks such as GEG, TV2, POW, etc., benefited from this positive news. The market recovered to the MA200 level with good upward momentum across most sectors.

▶ At the close of trading, the VN-Index increased by 43.42 points (+2.69%), reaching 1,658.19 points; the HNX-Index increased by 5.86 points (+2.40%), reaching 249.67 points. Market liquidity recovered during the session, but remained below the 20-day average at VND 25 trillion, corresponding to 1,036 million shares traded. Foreign investors continued to net sell VND 1,005 billion today, with the largest net selling value in VCB, STB, and BID. Conversely, MWG, VHM, and ACB were the stocks that saw net buying.

▶ Technical Perspective: Continuing the previous recovery momentum, along with increasingly clear signals about the possibility of reaching a peace agreement, the VN-Index surged more than 30 points right from the start of the session. Although the shares bought at the bottom during Monday's sell-off have been credited to accounts for trading, the price movements in the afternoon showed no significant increase in selling pressure. As a result, the VN-Index continued its recovery and just enough to reclaim the MA200 line. The RSI indicator also returned to the neutral zone (around 52), reflecting an improvement in short-term momentum. However, liquidity remains low amidst high deposit interest rates and lingering concerns about escalating tensions in the Middle East. If liquidity does not improve significantly, the VN-Index is likely to continue fluctuating in a sideways range in the short term.

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.