VN-Index technical recovery hits speed bump

Losing momentum: Vietnamese workers walk past the stock exchange building in Ho Chi Minh City. Over the course of four consecutive trading sessions, investors witnessed a decrease in the index by more than 100 points. — AFP

HANOI: The VN-Index shows signs of potential technical recovery after last week’s 8% decrease, which may stimulate bottom-fishing sentiment among investors in the short term.

However, geopolitical tensions in the Middle East and the ongoing exchange rate fluctuations continue to impact investor psychology.

Political conflicts and disputes in the Middle East and exchange rate volatility have led to a tumultuous trading week in the Vietnamese market, marking the most significant decline for the VN-Index since October 2022.

Over the course of four consecutive trading sessions, investors witnessed a decrease in the VN-Index by more than 100 points.

By the end of last week, the VN-Index closed at 1,174.85 points, reflecting a decline of 101.75 points (7.97%). This sharp decrease wiped out the gains made in the first three months of the year.

The market experienced a surge in liquidity, surpassing the 20-session average, as selling pressure intensified and spread across various sectors.

Throughout the week, the average liquidity on the Ho Chi Minh City Stock Exchange reached 1,070 million shares, representing a 41.23% increase compared to the previous week.

In terms of trading value, it amounted to 26.11 trillion dong, marking a 36.9% rise.

Analysts from Vietnam Kien Thiet Securities Joint Stock Co highlighted the broad decline across all industry groups, with sectors such as securities, industrial parks and construction experiencing intense selling pressure.

Meanwhile, defensive sectors like aviation, pharmaceuticals and telecommunications technology appear less affected.

According to Mirae Asset Vietnam Securities Joint Stock Co, negative macroeconomic factors, including the continuously rising dollar to the dong exchange rate, Middle East tensions and net selling by foreign investors, are contributing to the sharp decrease in the VN-Index.

These macro factors are creating a risky environment for the index.

In the short term, the 8% decline in the past week may stimulate bottom-fishing psychology among investors with ample cash positions, indicating a potential technical recovery for the VN-Index.

Technical analysis suggests support levels at 1,176 points and 1,181 points, and if the index touches these levels, a recovery is expected.

Saigon-Hanoi Securities Joint Stock Co (SHS) noted the continuous net selling by foreign investors on Hose, with large-cap stocks like VHM, FUEVFVND and CTG being heavily sold.

The market’s sharp decline has broken the previous support range and ended the previous upward trend, resulting in negative investor psychology.

SHS said that the VN-Index has returned to the wider accumulation channel of 1,150 to 1,250 points, losing the momentum to form an uptrend.

This suggests the possibility of a swing trend over a longer period, indicating a short-term trading style.

However, SHS emphasises that this is still an accumulation movement in the medium term and does not indicate a new downtrend cycle. — Viet Nam News/ANN

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