Vietnam stocks recover following world market trends

In the US market, the Dow Jones Index and S&P 500 recorded increases of 3.39% and 3.1% respectively during the week. Despite corrections in the last session of the week, with the impressive gains before, Wall Street had a positive week. In the same trend, European stocks also had a week of gains with the FTSE 100 up 0.96%, the DAX up 1.62% and the CAC40 up 2.26%. The Asian market last week recorded the most impressive gains among global financial regions with the Nikkei 225 up 5.17%, the Hang Seng up 6.68% and the Shanghai Composite up 5.29%.

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With the positive developments of the world financial indexes, the two main indexes of the Vietnamese market simultaneously reversed and increased again when the VnIndex and HNXIndex both increased by over 4% during the week. The fluctuations of the two indexes above show that the domestic market sentiment is very closely linked with the world stock market when major stock markets recover strongly. However, investors are still quite cautious before a strong recovery, shown by the market liquidity not increasing in the same direction as the index's increase, recording an average transaction value of VND 4,950 billion/session.

In addition, the market is also negatively affected by the net selling trend of foreign investors that shows no signs of stopping. If excluding the sudden net buying transaction of MSN, foreign investors' transactions last week still led the net selling trend of more than 656 billion VND.

In the derivatives market, VN30F1811 futures contracts traded at a historic high with 828,739 contracts traded due to speculative cash flow expecting the market to continue to fluctuate strongly, with the number of open positions (OI) reaching 86,547. The strategy for trading VN30 index futures contracts should generally still rely on the weakening trend of the market and prioritize opening sell positions when the market is at a high level. According to the assessment of the Securities CompanyVNDIRECTIn the short term, you should not risk opening a sell position when the index has not reached the resistance zone of VN30 at 920 points, and of VN30F1811 at 920-925 points.

The recovery is taking place interspersed with sessions of decline with the support zone of 885, resistance at 940-950 points and increases and decreases each session with great connection with the recovery of the world stock markets. The US dollar adjusted down to 96 basis points after reaching the peak of August 2018 at 97 points, helping emerging and frontier markets reduce concerns about foreign capital withdrawal as well as reduce exchange rate pressure. However, the net selling pressure of foreign investors in recent sessions in the Vietnamese market has gradually increased following the increase of stocks, causing significant resistance.

Ms. Nguyen Phan Cam Thuy, Senior Investment Consultant, Securities CompanyVNDIRECT, commented: “We believe that the indices and most stocks are still in a short-term recovery phase after a sharp decline in the past three weeks. Meanwhile, the larger risks in the direction of the USD and interest rates continue to make the short- and medium-term outlook of the market uncertain and negative. Therefore, we still maintain a cautious view and consider the current recovery as a good opportunity to reduce the proportion of stocks in the up sessions.”