Loosened global liquidity: Global liquidity improved after monetary easing measures from central banks, notably the Fed’s interest rate cut in its September meeting and the loosened monetary policies to support the economy that the People’s Bank of China – PBoC introduced in the last week of September. World stock indexes, especially the Chinese and Hong Kong markets, witnessed a week of sharp increases along with vibrant liquidity.

Investment fund cash flows continued to flow into emerging stock markets in the Asian region. In addition, assets classes mostly allocated to in the expanding liquidity cycle including stocks, gold, cryptocurrencies and commodities have had positive performance in the past 2 weeks and expands their performance in the latest 2 years. 

In the context of global cash flows spreading and returning to growing markets, Vietnam has become an FDI attractive destination given new registered FDI and FDI disbursement reaching a record in the first 8 months of the year. The Circular 68 regarding the removal of the 100% Prefunding requirement for foreign institutional investors has helped to ease investors’ sentiment towards the expectation of upgrading the stock market. VNINDEX witnessed a positive increase in the last week of September thanks to the momentum from the banking group and VN30, aiming to break the 1,300-point area. However, one of the important driving forces of the market, foreign capital flow, has not shown any signs of returning

Market scenario: We suppose that VNINDEX will end the year around 1,310-point, corresponding to a 15.94% increase ytd in the base scenario. The economic recovery, corporate profit growing, and the market upgrading status expectations will be the main drivers to help VN-Index surpass the 1,300 thresholds. However, in our view, the selling pressure around the 1,340-1,350 range will be very large and VN-Index may end 2024 around 1,310. In the positive scenario, VN-Index may even reach above 1,400 before the end of 2024. Conversely, in the negative scenario when the market trend is downward, we believe that the 1,190-1,200 range can play a supporting role for VN-Index.

Index leading momentum and sectors: In the positive and base scenario, the driving force for VNINDEX to overcome important resistance levels cannot be absent from the banking sector. In addition, we have a positive view on the securities, chemical-rubber, technology, and seaport-logistics sectors, which will take turns to resonate with the driving force for the index’s growth.

Investment strategy: In the short term, the market positive momentum remains. Investors holding positions should continue to observe and take appropriate profit-taking actions when the index encounters strong resistance.

GTJASVN Research_Strategic Report_VNINDEX breaks 1300 points along with increasing global liquidity_Oct2024_eng