The strong downward pressure continued as the stock market continued to plummet and broke through the 1,200-point mark on the derivatives expiry date of April 17. This was beyond the forecast of securities companies.
The sharp increase in exchange rates is considered a factor with a major impact on the market. Since the beginning of 2024, the USD/VND exchange rate has tended to increase, negatively affecting foreign capital flows in the stock market. The strong net selling trend of foreign investors in the market has been going on for many weeks, significantly affecting the VN-Index score recently.
In addition, US macroeconomic data may delay the US Federal Reserve's (Fed) interest rate cut until late 2024, compared to previous expectations for the first rate cut to be implemented in June this year.
Exchange rate fluctuations affect the business operations of many enterprises. However, depending on the characteristics of each industry, the impact of exchange rate increases will be differentiated.
For export enterprises, when the exchange rate increases, the value of the USD compared to VND increases. Therefore, export enterprises will receive more VND when selling goods in USD. Increased revenue combined with unchanged production costs (usually paid in VND) will lead to increased profits for export enterprises. Typical examples of this group include seafood, chemical, and rubber enterprises. Oil and gas enterprises with listed prices in USD also benefit from this trend.
On the contrary, businesses negatively affected by the rising exchange rate trend include some businesses in the plastics industry, which have a high proportion of imported raw materials, or electricity businesses that are purchasing input gas in USD, which may record increased costs.
Currently, the overall cash flow in the market is on a downward trend and is currently distributed mostly in the two large-cap (VN30) and mid-cap (Midcap) groups. There is still room for further cash flow to increase in these two groups. Meanwhile, the small-cap group is lagging behind. Therefore, experts also recommend that investors limit their investment in small-cap stocks, most of which are businesses with poor fundamentals.
Regarding the market trend, analysts from Asean Securities Company commented that the index had a strong decline, losing more than 22 points on Wednesday. The market opened at the highest level of the day with the momentum of the previous session but then quickly fell and closed at the lowest level. Trading volume was lower than the previous session but price movements showed that demand in the session was really too weak.
The index closed below the MA50 mark, but the downside is that the movement of the leading group, the banking sector, was quite negative, signaling a third correction in the next trading session and leading to a "margin call" situation.
Experts from CSI Securities Company recommend that the VN-Index is retesting the support level of 1,180-1,200 points, but there is no sign of a reversal to increase. Therefore, the exploratory buying position in this area has not brought profit and the possibility of continued pressure in the coming sessions cannot be ruled out. The priority is still to be cautious, limit the average purchase price down and need to patiently wait for more positive signals before increasing the proportion of stocks. The threshold around 1,180 points can open an exploratory buying position for accounts that do not yet hold stocks.
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