Stock Market Perspective Week 18-22/3: Approaching strong resistance of 1,300 points, consider trading too aggressively
VN-Index is approaching the strong resistance of 1,300 points and a correction scenario is likely to happen. Investors should not participate too actively at this stage even though the index has a recovery.
VN-Index recorded good absorption around the threshold of 1,230 - 1,250, continuing the differentiation between bluechips and midcaps.
During the week, liquidity on HoSE reached VND126,155 billion, down slightly by 6.6% compared to the previous week, remaining above the average with the average trading volume of VN-Index at over 900 million shares/session. The developments show that cash flow is still well maintained in the market, circulating among industry groups, although short-term selling pressure is still increasing strongly in many codes/code groups.
The information that is still of interest this week is that after more than 4 months, on March 11, 2024, the State Bank of Vietnam (SBV) resumed offering treasury bills. The SBV's reopening of treasury bill bidding activities is similar to mid-September 2023 when the USD/VND exchange rate was under a lot of pressure and interbank VND interest rates showed no signs of support.
This information has somewhat affected the psychology and fluctuations of the market, but the treasury bill activities have not affected the liquidity of the system, have not affected the interbank interest rate as well as the interest rate level from the State Bank's perspective, so they have not affected the market too much.
In addition to the activities of credit notes and credit growth, last week, there were some issues on draft legal changes. In January 2024, the National Assembly session passed two important draft laws, the Law on Credit Institutions and the revised Land Law. In particular, the Law on Credit Institutions has some important contents, focusing on strictly controlling lending activities and controlling cross-ownership in commercial banks.
Regarding sub-law documents, there are 4 Circulars and 2 Decrees this year, 2 important circulars were issued last week.
Including, Draft Circular amending Circular 22/2019 and 23/2020 on safety ratios in the operations of a number of banks.
As Letter of Credit (L/C - payment commitment of the Bank to import enterprises) was not previously included in credit growth, accordingly the credit growth room in the outstanding debt related to L/C was not included. But now according to the draft, L/C will be included in credit activities, so banks with high debt ratio related to L/C will have a certain impact, such as TCB, HDB, TPB and VPB.
Some other notable contents are criteria for determining credit institutions at risk of insolvency; special mechanisms for weak banks and banks receiving compulsory transfers; General Director decides on credit grants for credit appraisers and approvers of banks/non-bank credit institutions.
In addition, the new law on credit institutions included in this revised circular is the Circular amending Circular 39 on lending activities. In which, the regulation on the amount of money disbursed to ensure the performance of obligations is maintained, including lending activities for the purpose of depositing for real estate/project transfer contracts must be frozen until the termination of the guarantee obligation; proposing measures to more closely monitor credit records; more flexible conditions for loans with a value of less than 100 million VND.
In the short term, VN-Index is unlikely to surpass 1,300 points to form a strong uptrend, but instead fluctuates at 1,300 points. Looking back at last week, VN-Index increased by 16.43 points (1.32%) and closed at 1,263.78 points - still in the fluctuating zone and needs more time to accumulate before considering the next increase. Therefore, at 1,300 points, there may be a possibility of a downward correction when the short-term increase weakens and excitement decreases.
However, the market always has opportunities, recording significant supply absorption last week, some stocks showed signs of bottoming out and rebounding before the market. On that basis, investors can disburse to explore stocks with good fundamentals, with support from cash flow when the market adjusts such as HPG (29,900-30,150); NKG (23,800-24,200). Stocks with cash flow confirming a new trend and just escaping the accumulation base such as TV2 (44,000-44,300); CTD (73,900-74,300).
But also note that the Index is approaching the strong resistance of 1,300 points and a correction scenario is likely, so investors should not participate too actively at this stage even though the index has a recovery.
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