Market likely to extend losses this week

DNHN - After the Vietnamese stock market experienced a turbulent week, analysts believe that the short-term downward risk is likely to remain due to investors’ pessimistic sentiment.

The VN-Index opened last week on a negative note, with a fall of over 68 points. During the morning trade, it even witnessed the largest percentage fall in history of over 80 points.

However, the bottom-fishing activities helped the benchmark index recover more than 56 points in the last four sessions.  

It ended the week at 1,366.8 points, up 1.17 per cent on the previous session. However, the index still fell slightly by 0.9 per cent, marking its fourth weekly loss. 

Trading value on the Hồ Chí Minh Stock Exchange (HoSE) decreased by 23.9 per cent from the previous week to over VNĐ89.6 trillion (US$3.9 billion), equivalent to a decrease of 19.9 per cent ​​in volume to 3.09 million shares.

Meanwhile, the HNX-Index on the Hà Nội Stock Exchange (HNX) fully recovered from the loss seen earlier in the week. It closed the last trading session at 365.83 points, up 1.56 per cent. For the week, it increased by 1.87 per cent. 

The northern bourse saw a drop of 19.1 per cent in trading value to VNĐ10.3 trillion, equivalent to a trading volume of 454 million shares, down 14.6 per cent. 

Both benchmark indices fell in April, with the VN-Index losing 125.35 points month-on-month, while the HNX-Index declined by 83.79 points. 

The market fell sharply last month as domestic investors became more cautious, while foreign investors were more enthusiastic. 

Accordingly, foreign investors net bought nearly VNĐ4.2 trillion in April, after net sold for eight consecutive months with a total value of over VNĐ43.5 trillion. Last week alone, foreign investors net bought more than VNĐ813 billion.

KIS Việt Nam Securities Corporation said that the downside risk is likely to remain in the short term due to investors’ pessimistic sentiment. Therefore, investors should wait for the next signals and observe more. 

Experts from SSI Securities Corporation (SSI) said that the VN-Index extended the recovery momentum in the last trading day and broke over the resistance near 1,365 points. In a positive case, it might continue recovering to the range of 1,377 - 1,380 points.

However, with the medium-term downtrend remaining, combined with the possible rate hike of the US Federal Reserve in the first week of May, the VN-Index may face the risk of correction.

According to Mirae Asset Securities Việt Nam, after losing for eight consecutive sessions, the VN-Index rebounded for four straight sessions, lifting the short-term sentiment.

But the current rally is lacking the support of liquidity, reflected in the average matching volume in four recovering sessions being below VNĐ15 trillion per session.

In the derivatives market, VN30 futures contracts are 1-13 points lower than the benchmark index, showing that traders are still expecting the market may correct in the near future.

Mirae Asset Securities said that the short-term resistance of the VN-Index is in the range of 1,390 - 1,400 points, while the short-term support zone is in the range of 1,260 - 1,280 points. 

On the other hand, analysts from SHS Securities Joint Stock Company said that the slight decrease of the week was thanks to higher demand after the sharp drop on Monday, helping the VN-Index to recover in the remaining sessions. Liquidity slid, but ahead of the 4-day holiday, it is quite normal and has happened before, SHS added. 

SHS is quite positive about the market’s trend. With the VN-Index still ending the week above the threshold of 1,350 points, there is still a possibility that the market will rise toward the range of 1,530 - 1,550 points.

The current risk probably only comes from investor psychology with the famous saying "sell in May and go away”, meaning to sell stocks in May and get out of the market. However, with the fact that the VN-Index decreased by 8.4 per cent in April, a further decrease in May is unlikely, SHS said. 

Therefore, the benchmark may recover to gradually narrow the gap with its next psychological threshold of 1,400 points this week.

Source VNS