The VN-Index may continue a short-term downtrend

The VN-Index stayed in the red for the yesterday session before closing at 1,118.1 points, losing 3.2%.

The VN-Index opened in a pessimistic manner and stayed in the red for the yesterday session before closing at 1,118.1 points, losing 3.2%. The HNX-Index had the same pattern and shrank 4.2% to 226.7 pts. From the opening bell, the financial services and banking sectors led the market lower. VND declined to its floor, followed by HCM (-6.8%) and SSI (-5.9%).

Selling pressure rapidly spilled over to other sectors, such as real estate and steel, causing panic selling activities among investors. The bearish trend continued in the afternoon, with all sectors losing points today.

News of an ongoing inspection of the banks’ collateral management for bond issuance activities in the context of recent bond issuance violation cases seemed to add downward pressure on banking and financial large caps. This story, combined with the news of continuing T-bill issuance from the SBV, negatively impacted fragile investor sentiment.

In the meantime, the US dollar DXY index continued to rise and reached 107, while the USD/VND exchange rate broke through 24,400. Pressure on the currency-impacted bond yields—the 10-year has risen more than 40 basis points since early August—which in turn is putting pressure on equity valuations. The pattern is eerily similar to last October, when stocks sank as the dollar soared. Hopefully, stocks will recover this year as strongly as they did when the USD declined in the closing weeks of 2022.

Although the 3Q23 economic data suggest a slower-than-expected recovery, some export companies have started to show better performances. VGC announced its 9M23 pre-tax net profit of VND1,590bn (US$65mn), reaching 131% of its yearly plan. The company’s export segment was the main contributor. Its profit rose 151% YoY to VND819bn (US$33.6mn).

The top ten most laggard stocks took 17.1 points off the index yesterday. The largest laggards were BID (-5.5%), VIC (-5.1%), HPG (-5.3%), VHM (-3.7%), and GAS (-3.4%). There were barely any stocks supporting index gains. The largest contributions came from DBD (2.9%), BWE (1.1%), DPM (0.5%), and VSH (0.5%).

All sectors lost ground yesterday, led by materials (-4.7%), energy (-4.5%), and real estate (-4.0%). Top index movers included DBD (2.9%), BWE (1.1%), DPM (0.5%), YEG (6.7%), and VSH (0.5%). Top index laggards consisted of BID (-5.5%), VIC (-5.1%), HPG (-5.3%), VHM (-3.7%), and GAS (-3.4%). The top three major put-through transactions were MSN with 5.7 million shares (VND443.9 billion), TCB with 4.1 million shares (VND139.9 billion), and HSG with 5.4 million shares (VND103.8 billion).

Foreigner's net bought on HOSE to the amount of VND77.5bn, and also net bought on HNX to the amount of VND13.5bn. They mainly bought HPG (VND100.4bn), MBB (VND92.8bn), and MWG (VND92.5bn) and mainly sold HPG (VND101.9bn), MSN (VND100.5bn), and MBB (VND92.8bn).

The market dropped strongly with wide dumping pressure. VN-Index created a dropping gap from the beginning, broke bottom, and dropped stronger in the second half of the afternoon session. The market leaned completely on sellers; many even dropped to the floor. In which most pillar groups like banking, securities, real estate, steel, and food dropped strongly. On the contrary, defensive groups like water and pharmaceuticals tended to attract cash flow and closed in light green. While domestic investors sold strongly, foreign investors also didn’t support the market as they turned to net selling again.

PHS said, in technical terms, the VN-Index dropped strongly again. The volume increased to above the 10- and 20-session average, showing strong selling pressure. Not just that, it dropped with a thick candle and cut down to below MA5, and MA5, 10, and 20 still differentiated negatively, showing that the dropping trend is still there. Moreover, MACD stayed below Signal, maintaining the selling sign, and RSI dropped to 29, showing that correcting pressure is still strong and the index might see pressure to move to sentimental support of 1,100 points. For HNX, HNX-Index saw a similar situation. It also dropped strongly with a thick dropping candle and closed below MA5 and 20, showing that the dropping trend is still there and the index might drop to 222 points (MA200). In general, the market is on a short-term downward trend. Therefore, investors should keep a low surfing weight to limit   unexpected risks from the general market.