Market analysts forecast that selling pressure will still increase during the decline of the market this week. Investor sentiment will remain easily exposed under the movements of interest rates, exchange rates, and the bond market.
The VN-Index lost the 1,000-point landmark on Friday. It decreased by 2.22 percent to close at 997.15 points.
The index had declined 2.94 percent last week.
Vietnam Foreign Trade Bank Securities Company Limited (VCBS) said that, following the European Central Bank (ECB) and the US Federal Reserve (Fed), on November 3, the Bank of England (BOE) announced its decision to raise interest rates by 0.75 percentage points to 3 percent. This is a very strong increase in a short period.
This implies that the State Bank of Việt Nam will likely continue to raise the operating interest rate along with the exchange rate increase to ensure the balance between the two countries.
This trend is not only observed in Việt Nam but also many other emerging economies. Rapidly and sharply rising interest rates for both lending and deposit rates in many countries in a short period have put pressure on net capital outflows in asset markets in emerging markets and led to risks in assets valuation, VCBS said.
Saigon - Hanoi Securities Joint Stock Company (SHS) said that the Vietnamese stock market is under a selling pressure equivalent to the time of the COVID-19 pandemic in March 2020, together with macroeconomic factors related to interest rates, exchange rates, and the bond market, making it difficult to determine whether the market has formed a long-term bottom or not.
According to Bảo Việt Securities Co (BVSC), the market may face downward pressure this week. It is recommended for investors to secure profit and reduce stock exposure. Investors should temporarily stop opening long positions. Buying should only be considered when VN-Index dips back to the 978-988-point and 930-950-point zones.
“It is expected that VN-Index will return to test supply and demand at the support level of around 980 points. If the cash flow continues to support, the market will have a chance to recover. Therefore, investors need to slow down and observe the movement of the supporting cash flow to re-evaluate the market state,” said BVSC.
“The market fell deeply on Friday but then recovered and formed a Hammer candlestick pattern on the charts of VN-Index and VN30-Index, thanks to an effort to absorb supply at low prices. However, this support signal needs to be confirmed in the next session, whereby the market will move back at the beginning of the next session to test supply and demand,” it said.
Construction materials stocks fell the most in the past week with a decrease of 8.5 percent in market capitalization. The main reason for this came from the sharp drop in the steel industry with representatives of losers such as Nam Kim Group (NKG) down 17.5 percent, Hoà Phát Group (HPG) down 12.8 percent, Hoa Sen Group (HSG) down 9.4 percent. Besides, chemical stocks also fell sharply, specifically PetroVietnam Cà Mau Fertiliser JSC (DCM) decreased by 8.9 percent, Đức Giang Chemical (DGC) decreased by 8.3 percent, and Phú Mỹ Fertiliser (DPM) lost 8.1 percent.
The consumer service industry also dropped strongly with 8.5 percent of market capitalization, mainly due to the strong drop in retail stocks such as Mobile World Group (MWG) down 13.4 percent, Digiworld (DGW) and FPT Retail (FRT) both down 11.3 percent.
Real estate stocks also performed poorly. Development Investment Construction JSC (DIG) was down 12.6 percent, Kinh Bắc Corporation (KBC) was down 7.3 percent, and Đất Xanh Group (DXG) was down 6.3 percent. Insurance stocks like Bảo Minh Insurance Corporation (BMI) are down 11 percent, Bảo Việt Holdings (BVH) is down 4.8 percent, and PVI Insurance Corporation (PVI) is down 2.5 percent.
The rest of the sectors all decreased such as information technology down 3.9 percent of market capitalization, industry down 3.1 percent, oil and gas down 2.6 percent, pharmaceutical and medical down 2.5 percent, consumer goods down 2.5 percent, banking and community utilities both decreased by 0.5 percent.