Did the VN-Index reach a short-term bottom?

The Vietnam stock market appears to be building a bottom for a new recovery rhythm in the immediate term. 

A late rally helped stocks close a previous week on a strong note. The VN-Index fell through most of the morning session to its intraday low of 1,108.4 but rose throughout the afternoon to close with a big gain of 14.6 points (1.3%) at 1,128.5, although it was still down 2.2% for the week. Similarly, the HNX-Index edged up 1.1% today to 230.5 but fell 2.5% for the week.

The market opened with a small gap of 2.4 points but quickly decreased on low volume as investors demonstrated they were unconvinced by yesterday’s recovery. Trading was quiet in the morning but much more active in the afternoon when estimates spread that financial services companies are likely to report good QoQ improvements in profits before tax. Moreover, Trung Nam Group announced the early buyback of VND2,000bn (USD82mn) of bonds. As a result, VND (6.9%) took the lead as Financial Services sector stocks VIX (6.7%), SSI (4.1%), VCI (2.9%), HCM (2.9%), and MBS (5.3%) recorded strong gains.

Property developers reacted well to the news that the government is focusing on removing barriers in order to quickly implement real estate projects. As a result, property sector stocks regained increasing momentum, including VHM (3.4%), DIG (2.3%), DXG (0.6%), NVL (0.7%), and PDR (2.2%).

Additionally, several mid- and small-caps reached their ceilings today. YEG (7.0%) has rallied 30% since September 28. Other strong mid-caps today included TCH (6.8%), HTN (6.9%), NBB (6.8%), and RDP (6.6%). On the other hand, PGV (-3.8%), DPM (-1.4%), MSN (-0.1%), and KDC (-0.6%) were the top index laggards today.

Real estate (1.9%), consumer discretionary (1.7%), and industrials (1.7%) rose, while utilities (-0.0%) lost ground today. Top index movers included VHM (3.4%), VCB (1.1%), VNM (2.1%), BID (1.4%), and CTG (2.1%). Top index laggards consisted of PGV (-3.8%), DPM (-1.4%), MSN (-0.1%), KDC (-0.6%), and PGD (-2.6%). The top three major put-through transactions were EIB with 9.5 million shares (VND161.3 billion), HPG with 5.6 million shares (VND145.6 billion), and VSC with 4.7 million shares (VND121.7 billion).

Fluctuations of Vn-Index

Foreigner's net sold on HOSE to the amount of VND0bn, and also net sold on HNX to the amount of VND0bn. They mainly bought TCB (VND50.5bn), VIX (VND49.5bn), and VNM (VND48.5bn), and mainly sold MSN (VND129.5bn), TCB (VND50.5bn), and MWG (VND36.7bn).

SHS claimed that despite a strong comeback session at the conclusion of the week, signaling that the market may be nearing the end of its correction period, the VN-Index lost its uptrend support thresholds at 1,150 points and 1,135 points during the fourth week of a significant correction. The market will take a lot of time to reach an equilibrium position because the VN-Index has not yet recovered the support level of 1,135 points and because recent market adjustments have been powerful with large amplitudes. Recovery attempts will become more technical in the future.

“The Vietnam stock market appears to be building a bottom for a new recovery rhythm in the immediate term. Because of the short-term rhythm, short-term investors with a high risk tolerance might engage in distribution at adjustment sessions with a cautious attitude. It will only be technical in nature if it is formed”, said SHS.