Digital screen showing stocks information inside the building of the Hồ Chí Minh Stock Exchange. VNA/VNS Photo

HÀ NỘI — The stock market has been lifted by recent easing of pressure on exchange rates, inflation, and interest rates, but expected negative business results in the first quarter are likely to weigh on sentiment in the short term, said VNDirect Securities Company.

Last week, the VN-Index on the Hồ Chí Minh Stock Exchange (HoSE) closed at 1,052.89 points, down 11.41 points, or 1.07 per cent. Meanwhile, on the northern bourse, the Hà Nội Stock Exchange (HNX), the HNX-Index declined 2.59 points, or 1.23 per cent, to end the week at 207.25 points.

Both benchmarks logged a weekly fall, of which the former dipped by 1.51 per cent and the latter by 2.1 per cent.

The liquidity of the market decreased, while the breadth also was in negative territory as the short-term selling pressure mainly hit the real estate and securities groups after good rallies.

For the week, the liquidity on HoSE dropped by 4.6 per cent in value to VNĐ64 trillion (US$2.7 billion), equal to a fall of 9.91 per cent in trading volume. That of HNX was VNĐ8.16 trillion, a decline of 0.7 per cent.

Foreign investors were net sellers for the third week in a row, with a stronger increase in net selling value to over VNĐ1.7 trillion.

According to VNDirect, large cash flows have not returned as capital did not improve significantly and was only focused on speculative stocks, which made the recent rallies short and not really strong.

Therefore, when the market lacks supportive information, it activates the profit-taking activities of short-term investors in recent hot stocks such as real estate and securities, causing the indices to correct.

The continuous net selling of foreign investors in recent weeks has also put considerable pressure on the market.

As a result, VNDirect thinks that the market may have a short correction to the support area of 1,030-1,040 points. However, the scenario of a steep correction will be unlikely thanks to recent easing pressure on the exchange rate, inflation, and interest rates.

The securities firm added that the short-term pressure on the market mainly comes from the expectedly negative business results of the first quarter of 2023.

However, the pressure is not going to be strong when the market's valuation is in a relatively high discount area compared to history.

Assuming that the business results in the first quarter of 2023 continue to be less positive than in the fourth quarter of 2022, the market P/E may rise to around 12.5 times, which is not a high level compared to the historical data.

Therefore, VNDirect believes that investors can take advantage of the corrections to restructure their investment portfolio and consider increasing the proportion of stocks if the VN-Index returns to the support zone of 1,030 - 1,040 points.

Investors should maintain a moderate proportion of stocks and limit  the use of margin leverage when the market is in a correction, the company added.

On the macro front, the positive point is that Việt Nam’s interest rates are tending to decrease while the US Federal Reserve is heading to end its cycle of rate hikes, said Saigon - Hanoi Securities JSC (SHS).

The Government also actively offers solutions to ease difficulties in the corporate bond and real estate markets.

However, macro tangles still remain as the risks and difficulties of the bond and real estate markets cannot be resolved immediately, the global economy is facing risks of recession and instability in the US and Europe due to the ongoing Russia-Ukraine conflict, and the banking system in the US, Switzerland, and Germany is facing liquidity risks.

Therefore, in a mixed backgrounds, the accumulation trend is also reasonable, SHS said.