The Vietnamese stock market opened the year of the Dragon on a positive note with two rising trading sessions.

 

The benchmark VN-Index extended rallies to surpass the threshold of 1,200 points and closed the week at the highest in five months. The gains were attributed to positive macroeconomic indicators and optimistic business performance expectations, according to experts. 

 

On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index ended the week at at 1,209.7 points, while the HNX-Index on the Hà Nội Stock Exchange (HNX) was last traded at 233.04 points.

 

Last week, the total trading value of the entire market increased by 20.2 per cent from the previous week to over VNĐ20.6 trillion per session (US$841.3 million), thanks to positive sentiment following the Lunar New Year.

 

However, foreign investors continued to net sell on all three exchanges, with a total value of VNĐ768 billion.

 

Domestic investors’ mood is quite positive, boosted by encouraging macroeconomic indicators within the country, according to VNDirect Securities Corporation. 

 

Particularly noteworthy are the Purchasing Managers' Index (PMI), export-import figures, and foreign direct investment (FDI) data for January. A clear recovery in listed companies' fourth-quarter business results also supported the bullish mood. 

 

These factors contribute to the market's optimism towards the upcoming annual shareholders' meeting in 2024 and the first-quarter financial reporting, which are anticipated to display a brighter outlook. 

 

As a result, the market is unlikely to reverse the current upward trend. The VN-Index has the potential to target the previous resistance level of around 1,240 points. This level poses a significant challenge to the market's upward momentum.

 

Saigon - Hanoi Securities JSC (SHS) said that last week, the market also took in news regarding the Prime Minister's Directive No. 06, issued on February 15, 2024. 

 

The directive emphasises the urgency of implementing key tasks after the Lunar New Year holiday. The PM specifically instructed the Ministry of Finance, in coordination with the State Bank of Vietnam and the Ministry of Planning and Investment, to promptly resolve any obstacles in their respective areas of responsibility. The aim is to meet the criteria for upgrading the stock market from frontier status to an emerging market. 

 

Notably, the Ministry of Finance is required to report on the progress of this matter to the PM before June 30.

 

Once upgraded, the stock market is likely to attract a strong inflow of foreign investment capital, particularly from passive investment funds such as those that track market indices from reputable global market rating organisations like MSCI and FTSE Russell, said experts. 

 

This is also an important factor that influences the long-term sustainable development of the market.

 

According to estimates from BIDV Securities Company (BSC), if Việt Nam is upgraded to an emerging market by MSCI and FTSE Russell, it is projected to attract approximately $3.5-4 billion in new investments in Vietnamese stocks.

 

Investors’ cashflow has swiftly returned to the stock market following the Tết holiday, leading to a significant surge in the VN-Index beyond the 1,200 point-level. The market breadth has also become more positive, with numerous industry groups contributing to the market's upward trend, rather than the sole concentration on the banking sector observed prior to the holidays.

 

Experts from Vietnam Construction Securities JSC (CSI) believe that the upward momentum shows no signs of slowing down after the last trading session, and even indicates the potential for further increases. The benchmark index tested the resistance level around 1,200 points in Friday’s trade, leading to profit-taking pressure, but buying power remained strong.

 

Meanwhile, Việt Dragon Securities JSC (VDSC) said that investors should remain cautious due to potential pressures from supply sources and a potential slowdown in market momentum, along with significant divergence in stock performances.

 

Experts from VDSC maintain a cautious stance amid the decline in global stock markets. — VNS