20170531_BSC_Vietnam Daily Review_EN_VN-Index struggling below 740 Level

Highlight

In the last trading session of the month, the VN-Index continued to correction rhythm from the beginning of the week. Selling pressure was not as strong as it is in the previous trading session, however, the market demand was not enough to bring up a broad recovery. The cash flow of the market has not really poured as steel stocks suddenly rebounded with support of liquidity and positive information effect from the decision to put protection tax into effect for colored steel sheets, HPG (+ 3.6%), HSG (+ 6.8%), NKG (+ 6.6%), TLH (+ 2.0%). In addition, the positive recovery also came for the stocks of Fertilizer, Plastics and Aquaculture, but in general, other market sectors have not shown any positive signs. Cash flow remains weak for key sectors such as Banking, Real Estate, Petroleum, Rubber, and Constructing Materials. Market breadth is varied, although there were more stocks gained than stocks continued to correct. The market liquidity today was weak, while the matching order trade only reached VND 4,140.338 billion there was an increase of the negotiated transaction which reached the value of VND 1,195.66 billion. Those transactions mainly focused on shares of VIC 698.74 billion, SAB 280.704 billion. Thus, in the late trading session of the month, the VNI officially lost the support level of 740 points, but maintained the upward momentum throughout the month, up 18.28 points or 2.54% compared to the closing session last month. The HNX-Index, although, was not able to conquer the resistance level of 94 points today, the index still maintained the upward trend in the month, increasing by 4,087 points, up 4.55% from April last trading session.
 

Market outlook   

Liquidity weakened today while negotiated transactions increased. On the one hand, the VN-Index failed to hold support level at 740 points in the session, cash flow continued to weaken and most market sectors were still in the process of correction. Although the steel industry stocks unexpectedly attracted cash flow, lack of support from large cap stocks, the VN30, the market became more cautious. The market indexes are close to the short-term average MA (15), and rebounded around the 735 level, which may also be considered as a support for the market trend. In the coming days, the market may continue to struggle around the resistance level of 740 points and liquidity will continue to decline. Lack of support from large cap stocks and positive return of cash flow may cause the market index to re-examine its lower cumulative price, investors are encouraged to continue lowering their portfolio exposure until the trend of cash flow movement was determined.