The market requires a prolonged period to reach stability

The stock market experienced significant volatility during the transitional trading week between July and August (from 29 July to 2 August). The final three sessions of July saw a recovery to approximately 1,255 points; however, there was a sudden sell-off during the first trading session of August 2024.

The stock market experienced strong fluctuations during the transitional trading week between July and August (from 29 July to 2 August).

The last three sessions of July saw a recovery to around 1,255 points, but there was a sudden sell-off in the first trading session of August 2024.

By the end of the week, the VN-Index continued to adjust to the range of 1,200-1,211 points (a strong psychological support level, which is also the highest price level of 2018, as well as the one-year and five-year average price) before recovering.

On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index closed the week at 1,236.6 points, while the HNX-Index on the Hà Nội Stock Exchange (HNX) ended at 231.56 points.

Both indices recorded weekly declines, with the former decreasing by 0.44 per cent and the latter by 2.15 per cent.

The average daily transaction value across the market was VNĐ16.1 trillion (US$638.6 million) per session, a slight drop of 0.1 per cent compared to the VNĐ16.12 trillion recorded the previous week.

After strong net selling amounting to VNĐ60 trillion since the beginning of the year, foreign investors reversed to net buying in the first two sessions of August. Foreign investors returned to net buying amidst a "turbulent" trading week.

Commenting on the return of foreign net buying in two consecutive sessions last week, Vietnam Construction Securities Joint Stock Company (CSI) noted that this is a positive signal, possibly indicating a new cycle of foreign net buying after a period of strong net selling.

Last week, steel stocks performed poorly with news of the EU's anti-dumping investigation. Specifically, Hòa Phát Group (HPG) fell by 0.73 per cent, Nam Kim Steel (NKG) dropped by 6.64 per cent and Hoa Sen Group (HSG) decreased by 7.34 per cent.

According to the Trade Remedies Authority under the Ministry of Industry and Trade, on July 30, 2024, the authority received information that the European Commission (EC) had received a valid request to investigate the application of anti-dumping measures on imports of non-alloy or alloy hot-rolled steel coil products from Việt Nam.

Experts from Saigon - Hanoi Securities Joint Stock Company (SHS) stated that the short-term trend of the VN-Index remains negative after a failed recovery attempt at the resistance zone around 1,255 points, corresponding to the highest price level of the year, and the short- to medium-term trendline connecting the lowest prices of November 2023, April 2024, and July 2024, leading to strong selling pressure.

Currently, the strong resistance level for the VN-Index is at 1,255 points, with support at the lowest price of 1,218.7 points on July 24, 2024.

In the last two trading sessions, the VN-Index adjusted to 1,209 points and rebounded above the lowest price on July 24, 2024, with many stocks experiencing sudden strong selling pressure and good recovery, especially those with good fundamentals and strong Q2 business results. This indicates a short-term shakeout of speculative and highly leveraged positions, and opens up many accumulation opportunities for quality stocks.

Experts from CSI Securities recommend that selling pressure still dominates, so the company continues to maintain a cautious view. Investors should temporarily refrain from opening new buy positions or increasing the proportion of stocks in their portfolios. Instead, they should patiently wait for clearer positive signals. In a downward trend, CSI expects the 1,195-point level to remain an important support level for the VN-Index next week.

This month, analysts from Nhất Việt Securities forecast two scenarios for the VN-Index. In the first scenario, with weakening pressure and active low-price demand in the 1,200 - 1,230 point range, the VN-Index may continue to fluctuate sideways within the 1,200 - 1,300 point range.

In the second scenario, if the VN-Index breaks through the 1,200 - 1,230 point support zone, a deeper correction risk for the market will be confirmed. The main index may have to find balance at lower price levels.

According to observations by economists and market experts, August is often one of the weakest months for stock trading activity. Moreover, with rising tensions in the Middle East and the lack of significant breakthroughs from major central banks, the trading outlook for global stock markets in the coming weeks does not appear bright.