Will this week see more gains in the VN-Index?

VN-Index opened the new week higher but could not maintain the positive momentum and closed down 0.4%, or 5.3 points, to 1,280.0. The HNX also decreased 0.5%, or 1.1 points, to 238.9. Most sectors fell yesterday, led by Banks (-0.3%), Industrial Goods & Services (-1.0%), Utilities (-0.7%), Chemicals (-1.3%), Retail (-1.7%), Technology (-1.2%), and Telecommunications (-1.6%). On the other hand, Real Estate (0.5%), Financial Services (0.4%), Media (1.1%), and Basic Resources (0.1%) were the only four sectors that gained today.

PNJ (-5.8%) was one of the top laggards today after reporting a net margin in July that decreased 1.1% YoY, leading to a decline of 42% YoY in net profit. VIC (1.4%) was one of the top performers today after VinFast announced an agreement with For Green Future (FGF), a company 90% owned by Vingroup Chairman and VinFast CEO Pham Nhat Vuong, to provide discounts for existing Vietnamese owners of VF8 and VF9 models who want to buy new VinFast vehicles.

Foreign investors net sold today for VND421bn (USD16.9mn). The selling momentum focused on HPG (VND148bn, USD5.9mn), HSG (VND72bn, USD2.9mn), and VPB (VND66bn, USD2.6mn). Foreigners net bought HCM (VND66bn, USD2.6mn) and VCI (VND36bn, USD2.3mn). Other top laggards today included VNM (-2.0%), MSN (-2.2%), FPT (- 1.2%), VCB (-0.4%), and CTG (-1.0%), which dragged an aggregate 3.5 points off the VN-Index. Conversely, other top gainers included VHM (1.9%), VPB (1.3%) and VRE (1.8%).

Following Powell’s speech, the DXY declined to below 100.7, resulting in a significant strengthening of the VND, with the USD/VND exchange rate falling to around VND24,978/USD on August 23. This reversal marked a significant improvement from the 5% depreciation experienced in 1H24, as the YTD depreciation rate had reduced substantially to 2.9% by August 23. Overall, from a macro standpoint, VNDirect believes this development is a tailwind for both the SBV and foreign investment flows.

First, waning foreign exchange pressure will allow the SBV more flexibility in monetary policy, potentially leading to lower market interest rates, increased liquidity, and a stronger foreign reserve position by year-end.

Second, foreign investors have net sold more than VND60tn (USD2.5bn) in 8M24, primarily driven by concerns about foreign exchange risks and the widening interest rate differential between the Fed funds rate and Vietnam rates, leading to significant foreign capital outflows. Thus, with the DXY falling and the anticipated decline in the Fed funds rate next month, the current macroeconomic backdrop is fueling a perfect storm for a shift in foreign investment flows toward emerging markets with higher interest rates, including Vietnam.

Vietcap said there is currently no negative signal on the VN-Index, and the upward momentum will continue this week. Vn-Index could test the 1,300 point threshold. However, the risk of correction in this area cannot be ruled out, and the support level during the session will be 1,275 points.

“Volatility increases around the resistance of 1,300 points with the participation of large-cap stocks. The uptrend is the main trend, and strong corrections will be an opportunity to increase the proportion again. If the 1,275-point threshold is broken, the 1,260 point threshold will be the next support, and this is the area where new buying positions can be opened again,” said Vietcap.