Should we "buy the bottom" of stocks when the stock market is "shaky"?

VN-Index marked more than 3 consecutive weeks of sharp decline, money flow "stayed on the sidelines". At the same time, many investors chose the "bottom fishing" strategy to optimize profits, experts commented.

VN-Index "shakes", money flows outside waiting for signals

VN-Index marked more than 3 consecutive weeks of sharp decline, last week alone, the index "evaporated" nearly 23 points, after a few recovery sessions since last weekend, the index was pulled back to the 1,250 point area.

Liquidity last week also decreased by 17.4% compared to the previous week, at VND16,000 billion/session. Many experts shared that the decrease in liquidity showed that investors' concerns had been continuously lasting for a long time, causing cash flow to stay outside the market and observe. In today's trading session, July 31, although the market showed signs of recovery when the VN-Index increased slightly by 6.45 points (0.52%), liquidity was only at over VND17,000 billion.

With this development, many investors expressed concern and even recorded many losses in the recent "shaky" sessions.

The market has fluctuated strongly in recent times (Photo: SSI iBoard)

Commenting on this development, Mr. Tran Quoc Toan - Business Director, Headquarters Branch of Mirae Asset Securities Company said: The market is going through a period of adjustment after a strong increase in the first 6 months of this year, in the context of increased liquidity in the government bond market, showing that cash flow is tending to find safer investment channels in the context of high interbank interest rates.

In addition, there are some other factors: Profit-taking pressure after a period of growth, and external factors such as increased interbank interest rates or increased USD/VND exchange rates. These are developments that can cause caution among investors, especially foreign investors, leading to capital withdrawal from the market.

Regarding this development, Mr. Toan added that the recent series of adjustments in the Vietnamese stock market is a common occurrence after a strong growth of 10.2% from the beginning of the year to the end of June 2024.

However, on the positive side, the Government's supportive policies, especially the loose monetary policy, along with positive expectations of new laws and the prospect of market upgrade, are creating optimistic signals for the Vietnamese stock market.

A "bright spot" appeared in foreign investors' net buying reversal last week.

Going against the market trend , investing in stocks for nearly 10 years now, Ms. Phuong Anh (34 years old, Tay Ho district, Hanoi) appears quite calm. She said: "The market has fluctuated quite strongly in recent times, but with my investment experience, the market still has a lot of potential. And this is the opportunity to collect the stocks I want, at attractive prices. I am mainly interested in banking and real estate stocks".

Sharing the same view, Ms. Linh Nga (41 years old, Ba Dinh district, Hanoi) has also collected some potential stocks in recent sessions: "Savings interest rates have increased but are still low, so I still maintain my investment strategy in the stock market, taking advantage of the market adjustment, buying some stocks with many growth signals in the coming time such as retail and export".

In reality, many investors have a strategy of "buying the bottom" of potential stocks during market correction sessions, in order to minimize investment capital.

The market still has a lot of positive room but "no rush" to catch the bottom

Sharing about this move by investors, Mr. Toan said that the Vietnamese stock market still has a lot of room for growth in the medium and long term thanks to positive supporting factors, specifically:

Vietnam's macro economy is showing positive signs of recovery: GDP growth in the second quarter reached 6.93%, far exceeding the forecasts of many domestic and foreign organizations, especially the significant improvement in production activities. In addition, FDI capital invested in Vietnam continues to grow well, with newly registered FDI capital increasing by 46.9% compared to the same period last year.

Interest rates remaining low compared to 2023 will positively support the stock market: Low interest rates help reduce capital costs for businesses, while encouraging cash flow into the stock market instead of savings.

The Government has been issuing many policies to support the economy: Land Law (amended), basic salary increase policy, VAT reduction... These policies will stimulate consumption, promote economic growth and attract more investors.

Definition The current stock market valuation is quite attractive: the estimated P/E (Price to Earnings Ratio) of VN-Index in 2024 is 11.5 times, lower than the 5-year average of 13.4 times. This valuation is considered attractive and can attract investment flows, especially when foreign capital is expected to return when the US Federal Reserve (Fed) begins to cut interest rates.

Therefore, "investors can consider investment opportunities during this adjustment period, especially in industries such as banking, securities, oil and gas, chemicals, retail, export and food," Mr. Toan emphasized.

However, investors still need to be cautious , carefully research information and have appropriate investment strategies to take advantage of opportunities and minimize risks.

- Be patient and take a long-term view, because in the long run, the fundamentals of the economy will be the main drivers of growth.

- Focus on finding businesses with solid business foundations, operating in industries with good growth potential and able to benefit from government support policies.

- Need to have a clear investment strategy, manage risks closely and should not follow the crowd. In some cases, do not "rush" to catch the bottom but should wait for clear signals from the market. And diversify the investment portfolio, focusing on stocks with good fundamentals and long-term growth potential.

Source: https://phunuvietnam.vn/co-nen-bat-day-co-phieu-khi-thi-truong-chung-khoan-rung-lac-20240731182649947.htm