Stock market with the trend of welcoming cash flow back

Last week, in addition to the improvement in cash flow, Vietnamese stocks also received supportive information that had a positive impact on market prospects.

Illustration photo: Minh Phuong/Tin Tuc Newspaper

Analysts say that solutions to support the domestic economy have not shown practical effectiveness, but the market may react positively before real macroeconomic changes take place.

The story of cash flow returns

According to VNDIRECT Securities Joint Stock Company (VNDIRECT), the market had a more positive week than expected thanks to the cash flow of domestic investors showing signs of returning to the market after withdrawing at the end of April before the April 30 - May 1 holiday. This was clearly seen when market liquidity increased by 14% in the last trading week.

US inflation data for April released last week maintained a downward trend and was lower than the market's previous forecast, further strengthening the possibility that the US Federal Reserve (Fed) may stop raising its key interest rate at its upcoming meeting in June.

Domestically, the State Bank also said it is considering the possibility of further reducing operating interest rates in the coming time to support economic growth recovery. The Government is also speeding up the drafting process to soon approve the Power Plan VIII as well as preparing to submit to the National Assembly for consideration and approval of the Resolution on reducing VAT by 2% at the upcoming meeting.

This information has had a positive impact on investor sentiment and triggered the cash flow that was standing outside the market to return. With these positive signals, VNDIRECT believes that the short-term uptrend of the market has been established.

Therefore, investors can increase the proportion of stocks if the VN-Index re-tests the area around 1,050 - 1,055 points, prioritizing industry groups with supporting information and with price strength superior to the general level such as banking, securities, public investment (infrastructure construction, construction materials) and energy (electricity, oil and gas). On the contrary, the strong resistance of the VN-Index is the area of 1,080 - 1,110 points. Investors should note not to chase high prices if the VN-Index approaches the above resistance zone, VNDIRECT recommends.

According to Saigon - Hanoi Securities Joint Stock Company (SHS), in terms of the macro situation, the positive point is that Vietnam's interest rates are showing a downward trend in the context that the US Federal Reserve (Fed) is also showing signs of continuing to pump money into the financial - credit system to help reduce liquidity risks of US banks.

The government is also actively proposing solutions to remove difficulties for the corporate bond and real estate markets. However, macro difficulties still exist when solutions to support the domestic economy have not shown practical effectiveness, the world economy is still very unstable, especially in the US and Europe. However, the market may react positively before macro changes actually take place.

SHS said that one of the positive information supporting the market last week was the information that the State Bank directed, oriented, and encouraged commercial banks to continue to reduce interest rates for businesses, both sharing with businesses and creating conditions to expand and further promote credit from now until the end of the year at the regular Government press conference in April 2023.

Thereby, the real estate stock group is a group that has received a lot of positive support information and has had a vibrant performance with liquidity continuing to improve well during the week, maintaining a positive recovery trend with many codes surpassing the old peak price range, good price increases concentrated in codes with market prices below book value such as QCG up 18.82%, VPH up 16.97%, TDC up 14.93%, ITC up 11.4%, DXG up 10.98%, SCR up 9.84%...

Financial services and securities stocks also had positive developments as liquidity improved and prices increased in stocks priced below book value and leading stocks, with BVS increasing by 16.33%, VIX increasing by 13.77%, WSS increasing by 12.96%, SHS increasing by 10.78%, SSI increasing by 8.39%...

The upward trend continued to expand to other industry groups such as industrial parks, construction, building materials, steel, oil and gas and stocks with positive business results in the first quarter; in which, industrial park and rubber stocks had outstanding price increases compared to the general index such as DTD increased by 30.1%, SIP increased by 10.65%, CLX increased by 10.61%, VGC increased by 10%, GVR increased by 8.39%...

Banking stocks have the nature of keeping the market pace and recovering well in the last sessions of the week such as STB up 7.4%, SHB up 5.94%, OCB up 4.76%, BID up 3.57%...

Mirae Asset Securities Joint Stock Company (Vietnam) said that according to the 2023 shareholders' meeting plan of 261 out of 400 listed enterprises on HOSE (accounting for about 80% of total capitalization), the pre-tax profit plan decreased sharply, concentrated in the non-financial group, while the banking, financial services and insurance groups set a 2023 plan to continue growing.

Pretax profit targets for 2023 are weak across most sectors, especially utilities, energy, materials, transportation, and retail.

Industries entering a recession are mainly export-related, such as logistics, chemicals, fertilizers, textiles, and seafood.

The main obstacle is the gloomy export outlook due to the risk of recession in the US, EU and increased competition from China after it reopens its economy.

Mirae Asset Securities Joint Stock Company (Vietnam) commented that the most difficult period of the Vietnamese economy has passed, but the economy still lacks strong growth momentum.

According to this securities company, VN-Index had a positive trading week when it increased by 26.59 points compared to the closing price at the end of the previous week. Not only did the score increase, the matching liquidity also recorded a strong increase. The notable point of the week was that the cash flow tended to shift to the group of stocks with low market prices.

Mirae Asset Securities (Vietnam) positively assessed the increase in points of VN-Index last week when the score was reinforced by liquidity. Technically, the index also successfully crossed the downtrend line connected by the most recent peaks. After crossing the trend line, the market may experience fluctuations to retest this threshold, but the medium-term trend has turned bullish. Short-term technical signals are at a positive level.

World stocks move in opposite directions

Vietnam's stock market increased amid mixed fluctuations in global stock markets.

In fact, global stock markets were mixed for most of last week's trading sessions, as traders weighed a range of issues, including hopes for a solution to the US debt ceiling, central bank monetary policy calculations, banking sector turmoil and signs of a slowing economy.

Investors are hoping the US Federal Reserve will pause its long-running rate-hike campaign after data showed US consumer and wholesale inflation continued to decline in April 2023. Official data showed US consumer inflation rose 4.9% in April 2023, slightly lower than the 5% increase in March 2023.

Major European markets ended the trading session on the weekend of May 12 in the green, while Wall Street stocks (US) fell after rising at the opening.

In New York, the Dow Jones Industrial Average fell 0.1% to 33,300.62 points. The S&P 500 Index fell 0.2% to 4,124.08 points, while the Nasdaq Composite Technology Index fell 0.4% to 12,284.74 points.

In Europe, London's FTSE 100 index rose 0.3% to 7,754.62 points. Frankfurt's DAX 30 index rose 0.5% to 15,913.82 points. Paris' CAC 40 index rose 0.5% to 7,414.85 points. The EURO STOXX 50 composite index rose 0.2% to 4,317.88 points.

Source