Stock Market Perspective Week 4

Stock Market Perspective Week 4 - 8/3: Market tends to adjust, need to control risks

With a strong week of gains, VN-Index surpassed the 1,250-point mark, but the increase was not very exciting. The current point range is also approaching the peak of August - September 2022, so the market is likely to return to a correction trend, and risk control needs to be prioritized.

The VN-Index ended February 2024 at 1,252.73 points, up 7.59% compared to January 2024 (and the strongest increase in the past 4 months), good market liquidity increased sharply by 124.2%, with an average transaction value of more than VND 23,282 billion. Good liquidity shows that cash flow is active, circulating and increasing well across stock groups. Over time, speculation also increases.

Note that the average liquidity is around 1 billion USD/session, only inferior to the times of August, September 2023 and early 2022, all of which were times of strong adjustment pressure in the past.

Another point to note, according to data compiled by Saigon - Hanoi Securities Company (SHS), also in February, individual investors continued to net buy strongly with a value of VND 6,495 billion, a very large amount in the past 2 years (only less than September 2023, October 2022 and March 2022). If considering the average net buying value/day, this is the strongest net buying month with only 16 trading sessions in February 2024. The trading proportion of individual investors remained high at 84.24%, above average.

Meanwhile, domestic organizations bought a strong net of VND9,500 billion from October 2023 to January 2024, and sold a strong net in February with a value of VND3,726.43 billion, accounting for a transaction ratio of 6.79%, below the average of 7% in the past 3 years.

Foreign institutional investors sold quite strongly in February with a net selling value of VND 2,328.23 billion, accounting for a trading proportion of 8.64%, above average and bringing the cumulative net selling from January 2023 to present to VND 27,212.01 billion. Meanwhile, foreign individuals also sold quite dramatically with a value of up to VND 440.71 billion.

Mr. Phan Tan Nhat, Head of Investment Consulting Group of SHS Securities Company, Ho Chi Minh City Branch, said that in the short term, VN-Index is surpassing the peak of 2023, corresponding to 1,245-1,255 points and will continue to encounter consecutive strong resistance zones corresponding to 1,280 - 1,295 points - the peak price in August-September 2022, the 1,300 - 1,320 zone - the peak price in June 2022. It should be noted that at times in the history of VN-Index in June 2022, there was a correction of 100 points, in August-September 2022, the correction of 300 points, in August-September 2023, VN-Index corrected 200 points.

Accordingly, in the short term, VN-Index continues to increase and meets a very strong resistance zone around 1,275 points, corresponding to the average price of the peak in August, September 2022 and the peak in August, September 2023. With very strong resistance, the annual resistance and the current capitalization zone are no longer cheap. Therefore, although the market is rotating very well with many opportunities to rotate on the basis of liquidity maintained at a very high level, over 1 billion USD. But when VN-Index is entering the above strong resistance zones, there will still be a risk of a correction of at least 50-100 points.

According to Mr. Nhat, it should be noted that VN-Index may have a short, strong distribution trading session with a trading volume of about 1.5 billion shares, liquidity of over VND 30,000 billion, with a warning signal that the morning session may have a sudden trading volume of over 800 million shares . Therefore, current positions are considered speculative, rotational and need to control risks, raise short-term stop losses accordingly. Prioritize focusing on groups of stocks with good fundamentals, leading the industry, and growth compared to the general market.

In general, the activity of continuing to re-test the new resistance zone at 1,250-1,255 points is still likely to recur. Therefore, the positions currently held can continue to be maintained. As for new buying positions, they should only participate in corrections in groups of stocks that ensure important factors of the trend, have attractive growth potential, receive attention from cash flow, have good fundamentals and have much growth potential.

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