Although the VN-Index only recorded a slight decrease of 0.4% in the past trading week, the actual pressure that investors had to go through was much greater than that number.
Expect new trends
According to Mr. Dinh Quang Hinh, Head of Macro and Market Strategy, VNDirect Securities Joint Stock Company (VNDirect), the US Federal Reserve (Fed)’s “more cautious” interest rate cut roadmap next year has caused strong fluctuations in the global financial market, pushing the fear index (VIX) to skyrocket in the session on December 18 to its highest level since early November.
The US stock market therefore adjusted sharply and the money flow seeking shelter caused the dollar strength index (DXY) to surge above the 108 mark. These factors put pressure on the domestic exchange rate, causing the interbank USD/VND exchange rate to exceed the “intervention” level and forcing the State Bank to sell about 2 billion USD of foreign exchange reserves to stabilize the exchange rate.
This development put a lot of pressure on the psychology of domestic stock investors and the VN-Index retreated to the support zone of 1,250 points.
However, it can be seen that the positive point is that the selling pressure is “not too strong” and the bottom-fishing cash flow has helped VN-Index maintain the above support zone.
Moving into the next trading week, the international financial market may develop more positively as negative information has been largely reflected in prices, especially the Fed being more cautious about the interest rate cut roadmap in 2025, due to uncertainties in President-elect Trump’s trade policy.
Notably, the market also received some more positive news over the weekend, including the fact that the Fed’s preferred inflation measure, the PCE (personal consumption expenditures) index, increased by only 0.1% compared to the previous month and increased by 2.4% compared to the same period, both 0.1 percentage points lower than forecast, showing that the inflation trend is still cooling.
At the same time, the US House of Representatives’ approval of a new budget bill to prevent a last-minute US government shutdown also helped reduce the risk of instability, causing the VIX index to drop sharply in the weekend session.
“I expect that a more stable global financial market will help improve domestic investor sentiment and promote the recovery of stock indices. The VN-Index may increase to around 1,270 points,” said Mr. Hinh.
According to Mr. Hinh, investors should take advantage of the recovery to restructure their investment portfolios, reduce leverage if it is at a high level, and build investment portfolios around industry groups with supportive information and improved business prospects, including maritime transport, logistics, import-export (textiles, seafood) and banking.
Mr. Pham Binh Phuong, an expert from Mirae Asset Securities Joint Stock Company (Vietnam), said that when it was broken through after a strong decline along with the general developments of the world market, the support level of 1,260 has become an important challenge for the market in the short term. The weakening of liquidity at the end of last week (December 20) shows the short-term balance of the VN-Index, and it is likely that this balance will soon end and be replaced by a new trend in the following sessions. In the short term, investors need to pay attention to the developments of the sessions on December 23 and 24 when the volume of shares traded on December 19, in addition, the short-term support level is the area of 1,250 – 1,253 points.
Stock market analyst Nguyen Huy Phuong from Dragon Viet Securities Joint Stock Company (VDSC) commented that the market continues to be supported and recovers but only stops at the exploration level around the MA20 line (an indicator in technical analysis used to measure the average price of an asset in the last 20 trading days).
Liquidity decreased compared to the previous session, showing that supply pressure has cooled down, but cash flow is still limited and mostly concentrated in small and mid-cap stocks. Although the support move is not yet decisive, the current support signal can still create momentum for the market to recover in the near future.
The market is expected to retest the 1,260 – 1,265 point zone and the supply and demand in this zone will have an impact on the next move of the market. Therefore, according to expert Nguyen Huy Phuong, investors can expect the market to recover. At the same time, investors can exploit short-term opportunities in some stocks that have improved from the support zone or have retreated to good support zones. However, it is necessary to consider the recovery to close short-term profits for stocks that have increased rapidly to the resistance zone or restructure the portfolio.
Regarding market developments, VN-Index has been under correction pressure for two consecutive weeks after recovering from the 1,200-point price range. Last week, VN-Index accumulated for the first three sessions of the week, then suffered correction pressure with quite sudden liquidity in the 5th trading session (December 10) and recovered in the last session of the week.
At the end of the trading week (December 23-27), VN-Index decreased by 0.4% to 1,257.5 points, trading below the 200-session average price line around 1,260 points. Liquidity decreased during the week with trading volume decreasing by 9.05% on HOSE.
The main trend of the market last week was strong differentiation. On the positive side, there were telecommunications, oil and gas transportation, maritime transportation, ports…
However, according to Saigon – Hanoi Securities Joint Stock Company (SHS), last week, many codes only decreased slightly in price, while many codes were still positive, surpassing the old peak price range, showing that the market differentiation is positive.
Foreign investors continued to net sell on HOSE with a value of VND 1,324.9 billion, affecting investors’ trading focus on the general market.
In fact, the negative performance of the Vietnamese stock market last week was quite similar to that of the world stock markets.
World stocks down
In the US, at the end of the weekend trading session, all three major indexes on the US stock market had a significant increase.
However, the December 20 rally was not enough to make up for the losses in the previous session. The Fed’s view after the December 18 meeting that there would be a maximum of two 0.25 percentage point rate cuts caused the US stock market to fall sharply in the trading session on the same day.
For the week, the S&P 500 fell 1.99%, the Nasdaq fell 1.78% and the Dow fell 2.25%. The Nasdaq snapped a four-week winning streak, while the S&P 500 posted its biggest weekly percentage drop in six weeks and the Dow posted its third straight weekly loss.
Asian stocks also fell on Friday, while the US dollar held gains against other currencies as investors assessed the impact of the Federal Reserve’s revised interest rate cut prospects and prepared for a second term as US President Donald Trump.
Data showing Japanese inflation rose more than expected last month did little to help the yen, which has been under pressure from a more hawkish Fed stance and the Bank of Japan’s (BoJ) refusal to tighten monetary policy.
Traders now await US personal consumption expenditure (PCE) data due later in the day, the Fed’s preferred inflation gauge and the last key data of the year.
In the Tokyo market (Japan), the Nikkei 225 index decreased by 0.3% to 38,701.90 points. In China, Hong Kong’s Hang Seng index decreased by 0.2% to 19,720.70 points, and the Shanghai Composite index decreased by 0.1% to 3,368.07 points.
Stocks in Sydney, Singapore, Seoul, Taipei, Mumbai and Bangkok also fell, while stocks in Wellington, Jakarta and Manila rose.
Fed policymakers on December 18 cut interest rates as expected, but signaled there could be only two rate cuts in 2025, compared with an earlier estimate of four cuts.
Data showing stronger-than-expected U.S. economic growth and consumer spending have failed to ease concerns that the Fed will keep borrowing costs higher for longer, while markets are betting on fewer than two rate cuts through 2025.
Fed Chairman Jerome Powell acknowledged on December 18 that Mr Trump’s economic plans, including tariff hikes, tax cuts and mass deportations, were taken into consideration when policymakers made their rate-cut estimates.
Economists at Bank of America Global Research said the bank is keeping its forecast for two more rate cuts next year, but the risk has clearly shifted to fewer (or no) cuts. The current rate cut is based on data that justifies the need for more cuts.