Investors Face Uncertain Landscape as VN Index Tests Support Levels
The Vietnam stock market grapples with investor caution as the VN Index approaches significant support at 1,250 points, following adverse trading conditions post-Tet holiday. A wave of selling pressure from profit-taking combined with overall investor wariness has been evident, particularly among technology stocks, which have faced substantial losses.
On February 4, the first trading day after Tet, the VN Index demonstrated signs of adjusting to previously absorbed negative information. Despite moderate selling, the index dropped considerably, indicating investor sentiment still reacts sharply to recent market conditions. The technology sector, and particularly stocks like FPT, experienced more than 5% declines, weighed down by growing concerns stemming from industry-specific challenges.
Market activity saw 166 stocks gaining ground on the HoSE, with some even achieving notable price surges during the closing session, hinting at investor interest in potentially undervalued securities. Nevertheless, this activity seems to be reactive rather than indicative of stronger overarching market confidence.
The VN Index is likely to continue its adjustment phase, with expectations for tests around the 1,250-point support level. Investors may encounter scenarios where the index could dip below this threshold temporarily, as market participants seek to shake out weaker hands and establish balance before any upward recovery can begin. Market technicians note the index has closed below its 200-day moving average yet maintains positioning above its shorter-term moving averages (20-day and 50-day). This suggests mixed signals, where medium-term sentiments remain optimistic, but short-term volatility is expected.
According to technical indicators, the MACD shows positive divergence, even as the RSI has dipped downwards, reflecting transient selling pressure. Investment strategies under these circumstances are leaning heavily on identifying strong fundamentals among individual stocks, particularly those showcasing solid earnings from the previously concluded Q4 2024.
Highlighting the broader market environment, investor deposits have plummeted to 73 trillion VND (~3.1 billion USD)—the lowest amount recorded over the past six quarters. Data compiled show major brokerage firms, including VPS and SSI, reporting significant declines, which mirrored overall market conditions. VPS, with over 17.1 trillion VND, still leads customer deposits but has seen dwindling balances by almost 5.7 trillion compared to Q3 2024.
Notably, even as banking deposits have registered all-time highs, margin lending reached unprecedented levels of roughly 245 trillion VND by the end of Q4 2024. This correlates to heightened speculation and reflects market participants’ desire to leverage their investments through borrowing amid anticipation of gains.
The backdrop for these dynamics includes approximately 9.2 million trading accounts as of the end of December 2024, marking growth toward the ambitious target of 11 million by 2030. Many new accounts often represent existing investors simply diversifying across different brokerage options, complicate true growth metrics.
Investor sentiment remains cautious, grappling with the mixed performance of the VN-Index, which has oscillated without clear upward momentum. Factors such as competing investment avenues—real estate, gold, and savings—continue to pull capital away from the stock market. According to the State Bank of Vietnam, both individual and organizational deposits have reached record highs, highlighting the increased appeal of short-term, stable returns amid uncertain stock market conditions.
Investors appear hesitant to reinvest meantime, resulting in lower liquidity levels as average daily transaction volumes have slipped below 13 trillion VND on HoSE. The early part of the year is typically slow due to the aftermath of the Tet holiday, adding to the downward pressure on stock prices.
Looking forward, analysts suggest cautious optimism for potential short-term rebounds around key technical levels, but progress may require clearer signals or market catalysts to sustain upward momentum. Maintaining liquidity might serve as prudent advice during this uncertain period, as discerning investors are advised to focus strategically on sectors and stocks with solid fundamentals, potentially leveraging technical analysis to guide trades.
With the VN Index bracing for potential fluctuations and market corrections, insights gathered from trends and investor behavior will define forthcoming trading sessions. Further monitoring of key developments across technology sectors and macroeconomic factors will play pivotal roles as the market adjusts to its new normal.