Stocks expected to surpass 1,300 points after Fed's move

The stock market experienced a week of active trading with 4/5 sessions increasing points. At times, the VN-Index fluctuated around the 1,280 point threshold, but was under great selling pressure at the end of the week, causing the index to narrow to the 1,270 point area.

During the week, the domestic market recorded some positive information such as the Ministry of Finance issuing Circular 68 which is important in upgrading the stock market as well as the State Bank reducing OMO interest rates to 4%/year.

Another highlight is that the Fed officially cut the policy interest rate by 0.5 percentage points, bringing the interest rate level down to 4.75% - 5%. This is a strong start by the Fed and also controversial when most economists are leaning towards the scenario of cutting the policy interest rate by 0.25 percentage points right before the meeting.

The main support for the index came from the banking group. The main factors supporting the market were TCB up 6.1%, CTG up 3.2% and ACB up 5.1%. On the contrary, GAS down 1.6%, VIC down 1.4% and PGV down 3.2% were the codes that put pressure on the index.

At the end of the week, VN-Index increased by 20.33 points compared to the previous week, equivalent to 1.62% to 1,272.04 points, HNX-Index increased by 0.81% to 234.3 points and UPCoM-Index increased by 0.7% to 93.6 points.

Average liquidity increased by 32.2% to VND16,309 billion/session, the last session of the week also saw liquidity surpass the VND20,000 billion mark after about a month.

Foreign investors net bought 1,229.4 billion VND on all 3 exchanges, of which net bought 1,222.6 billion VND on HoSE, net bought 71.1 billion VND on HNX and net sold 64.3 billion VND on UPCoM.

VN-Index performance last week (Source: TradingView).

Regarding the recent interest rate cut by the Fed, Mr. Dinh Quang Hinh - Head of Macro and Market Strategy Department, Analysis Department of VNDirect Securities Company, commented that it will certainly have a significant impact on the prospects of the global financial market in particular and the Vietnamese stock market in the coming time.

"There are voices saying that the Fed's aggressive interest rate cut is due to the risk of a recession in the US economy. In my personal opinion, this perspective is not comprehensive. In the context of lower-than-expected inflation and concerns about the job market, although still under control, the Fed's 0.5% interest rate cut is very logical," said a VNDirect expert.

Mr. Hinh said that cutting the operating interest rate by 0.5 percentage points is more like "a preemptive intervention" by the Fed than "a fire-fighting action" when everything is too late.

Domestically, Mr. Hinh believes that the Fed's interest rate reduction trend will have a positive impact on the economy and the financial and monetary market. The Fed's interest rate reduction will support the US economy and boost consumer demand, thereby positively affecting Vietnam's export prospects to the US.

It should be emphasized that the US is Vietnam's largest export market, accounting for nearly 30% of our country's total import value.

The Fed's interest rate cut also weakened the DXY, helping to cool down exchange rate and inflation pressures, thereby creating conditions for the State Bank to be more flexible in operating monetary policy, shifting priority to supporting system liquidity and maintaining a low interest rate environment to promote economic growth.

With the above expectations, VNDirect experts maintain a positive view on the Vietnamese stock market in the medium term from now until the end of the year, the scenario of VN-Index surpassing the 1,300 point mark this year is completely feasible.

Supporting factors include looser monetary policy, continued improvement in listed companies' business results, and new developments in the market cap upgrade story.

Therefore, any market corrections in the coming time will be a good opportunity for investors with a long-term vision to accumulate more stocks, prioritizing industries with positive growth stories at the end of the year such as banking, securities, import and export (textiles, seafood, wood products) and industrial park real estate.

Foreign trading developments (Source: FireAnt).

Associate Professor Dr. Nguyen Huu Huan - Head of the Department of Financial Markets, Ho Chi Minh City University of Economics (UEH) also had some assessments on the impact of the Fed's interest rate cut on the Vietnamese market.

First, our country will reduce exchange rate pressure and have more room to reduce interest rates. The Fed's interest rate reduction will also reverse capital flows, and Vietnam can receive indirect investment flows from developed countries.

"These impacts cannot happen immediately, because capital flows cannot be reversed immediately and because the stock market is not really attractive to foreign investors," Mr. Huan said.

However, Mr. Huan advised investors to wait and see how foreign capital will flow into the market in the coming time.

According to Mr. Huan, the outlook for the Vietnamese stock market is currently not really clear. If it were an emerging market, the impact from the Fed would certainly be more obvious. For these reasons, the market is currently dominated by domestic money.

Investors should be cautious at this time, because a Fed cut does not say much, especially when Chairman Jerome Powell emphasized that this is not a trend.

However, the Fed's interest rate cut also creates certain room for Vietnam to maintain a loose monetary policy, without having to reverse the policy.

Source: https://www.nguoiduatin.vn/lang-kinh-chung-khoan-23-9-ky-vong-vn-index-vuot-1300-diem-sau-dong-thai-cua-fed-204240921225000018.htm