A boost for the stock market

Macroeconomics gradually improving

According to Mr. Dinh Quang Hinh, Head of Macro and Market Strategy Department, Analysis Division of VNDIRECT Securities Joint Stock Company (VNDIRECT), the recovery trend of stock indices has not been violated after the sharp decline last weekend. Besides, the macro is also showing a quite positive improvement trend.

Specifically, domestic exchange rate pressure has cooled down significantly in the context of the market believing that the US Federal Reserve (Fed) will stop raising the operating interest rate. The cooling exchange rate has allowed for a more “relaxed” monetary policy.

In the last 6 auctions, the State Bank has completely stopped issuing treasury bills and pumped back into the market thanks to the amount of old treasury bills that have matured. Since the beginning of November, the State Bank has pumped back more than 108,000 billion VND, reducing the amount of treasury bills in circulation to nearly 100,400 billion VND.

This move has helped to increase liquidity in the banking system, causing interbank interest rates to drop sharply. Therefore, concerns about the risk of “domestic monetary policy reversal” have been removed, which will help improve investor sentiment and cash flow in the stock market in the final trading weeks of the year.

In addition to the exchange rate and monetary policy issues, many indicators show that Vietnam's growth recovery momentum is showing signs of improvement. In the past two consecutive months, exports have recorded positive growth again, with each month's growth rate higher than the previous month.

At the same time, other indicators related to industry and FDI capital flows also show positive improvement trends. In that context, Mr. Hinh expects that the fourth quarter business results of listed enterprises will recover positively and be a driving force for the stock market from now until the Lunar New Year.

The first two sessions of the week witnessed positive investor sentiment, especially in steel stocks, as the price of hot-rolled coil (HRC) showed a 50% recovery trend from the bottom in September, climbing to a 6-month peak.

On Wednesday's trading session, the market received positive information about inflation in the US, when the US CPI in October increased by only 3.2% compared to the same period last year, lower than the previous forecast.

This information caused the yield on 10-year US government bonds to fall below 4.5%, while helping the US stock index S&P 500 jump 1.2%.

VN-Index was no exception when it witnessed an increase of 14.8 points right from the opening and ended the session with an increase of 1.2%, with a transaction value of more than 16,000 billion VND.

The market traded more cautiously on Thursday with news of the expiration of the VN30F2311 futures contract, along with the possibility of not passing the draft Land Law at this National Assembly session.

In the last session of the week, the indices adjusted strongly due to negative information related to Vingroup group and profit-taking activities of investors.

At the end of a volatile trading week (November 13-17), the VN-Index closed at 1,101.2 points, equivalent to a slight decrease of 0.1% compared to the previous weekend; the HNX-Index recorded a decrease of 0.1% to 226.54 points and the UPCOM-Index decreased only 0.01% to close at 86.02 points.

This week, 3 stocks belonging to Vingroup Corporation had the strongest impact on the general index, with VHM down 7.9%, VIC down 6.1%, and VRE down 4.8%. These stocks took away 7 points from the VN-Index.

On the contrary, large-cap stocks such as BID up 1.7%, MSN up 3.9%, MWG up 5.1% and GVR up 2.3% supported and restrained the market's decline.

The positive signal of the market comes from liquidity when the average trading value per session on all 3 floors continued to increase slightly by 4.6% compared to last week, reaching 21,243 billion VND/session.

Foreign investors continued to net sell when the VN-Index was above the 1,110-point price range. Specifically, last week, foreign investors increased their net selling on HOSE with a value of VND1,346 billion this week, up 11% compared to the previous week. Foreign investors net sold on HNX and UPCOM with VND118 billion and VND86 billion, respectively.

Commenting on the current macro context, experts from Saigon - Hanoi Securities Joint Stock Company (SHS) said that domestic economic activities are still showing signs of gradual improvement in the last quarter of the year, interest rates are low, and inflation data in the US and Europe are also showing a downward trend.

However, the world geopolitical situation is still unstable, global interest rates remain high and the domestic real estate market needs more time to recover.

“With the current macro situation, if the market finds a balance point and creates an accumulation foundation to wait for the next macro movement, it is also an appropriate move,” SHS commented.

Analyst from Mirae Asset Securities Joint Stock Company (Vietnam), Mr. Pham Binh Phuong, said that from November 9 until now, VN-Index is still testing the resistance of 200-day MA (average price of 200 sessions) at 1,115 points.

“We expect the 20-day MA support level (the average value of the closing price of 20 trading sessions) at 1,088 points to be an important support for the index next week,” said Mr. Phuong.

In fact, Vietnam's stock indexes fell slightly last week, amid a recovery in global stock markets.

US stock investors “fear missing out”

European and US stock markets ended a positive trading week on November 17, with all indices rising.

A report of slowing US inflation raised hopes that the rate-hike cycle is over. US stock indexes erased early losses and ended the session in the green, recording a third consecutive weekly gain.

Specifically, the Dow Jones industrial index increased about 0.1% to 34,947.28 points, the S&P 500 index increased 0.1% to 4,514.02 points, and the Nasdaq Composite technology index also increased 0.1% to 14,125.02 points.

Analysts have described US investors as having a “fear of missing out” as the risk of a US economic recession appears to be receding.

European markets also rose, with London's FTSE 100 leading the gains as it closed up 1.3% at 7,504.25 points, despite data showing a surprise fall in retail sales in October.

Paris' CAC 40 index rose 0.9% to 7,233.91 points, Frankfurt's DAX 30 index rose 0.8% to 15,919.16 points. The EURO STOXX 50 composite index rose 0.9% to 4,340.77 points.

Weaker-than-expected US inflation data this week raised hopes that the Federal Reserve will not need to raise interest rates further. UK inflation also slowed more than expected.

Moneyfarm investment director Richard Flax said investors were increasingly confident that interest rates were at their highest and that inflation would continue to fall as energy prices fell. Overall, the stock market was in an uptrend last week.