A factory of steel maker Hoà Phát Group (HPG). HPG rose by 5.6 per cent last week. Photo HPG

HÀ NỘI Improved cash flow and positive sentiment are expected to drive market trends this week, as cooling domestic exchange rate boosts investor confidence.

Decreasing USD/VNĐ exchange rate paves the way for monetary policy easing, opening doors for speculative cash flow to re-enter the stock market, said Đinh Quang Hinh, Head of the Macro and Market Strategy Department of VNDirect.

"As the market enters the end of November, all eyes are on the National Assembly's potential passing of three amended bills related to the real estate market: the Land Law, Housing Law, and Economic Law. If these bills are approved, it will provide a significant boost to the prospects of real estate businesses," Hinh told Việt Nam News.

Amid a favourable market environment, he expects smart money to maintain its position in the stock market, sustaining the ongoing recovery momentum. Investors are advised to take advantage of any adjustment periods during the upward trend to strategically purchase stocks, as recommended by Hinh.

However, it's essential for investors to exercise caution and recognise the recovery phase as a preliminary stage, not yet confirming a sustainable upward trend. To manage portfolio risk, it is advised to maintain a reasonable stock ratio of around 50-60 per cent and minimise the use of leverage.

While the market has recently experienced a robust recovery, short-term profit-taking pressure may persist in the early sessions of this week. Hence, it is crucial for short-term investors to refrain from chasing stocks that exhibit sharp increases during the session. Instead, waiting for corrections before considering stock purchases is a prudent approach, as suggested by experts from VNDirect.

In the previous trading week, the Vietnamese stock market concluded with a significant profit-taking session, resulting in a drop of over 12 points for the VN-Index after a series of nearly 100-point increases from its bottom.

The early sessions of last week witnessed positive movements in the VN-Index, continuing the upward momentum from the previous week, mainly attributed to the 10-year US government bond yield's decline to 4.6 per cent. This drop in yields helped alleviate pressure on the domestic exchange rate, thereby improving domestic investor sentiment.

However, profit-taking pressure gradually intensified in the latter part of the week, particularly on Friday, following US Federal Reserve Chairman Jerome Powell's statement. He noted that the Fed would further increase interest rates if inflation accelerates again.

This statement triggered sharp declines in many international stock markets, leading to a correction in the domestic market during the weekend session.

Last week, the VN-Index registered a 2.3 per cent increase to reach 1,101.7 points, while the HNX-Index rose by 4.08 per cent to 226.65 points, and the UPCOM-Index recovered by 2.2 per cent, closing at 86.03 points.

Notable stock movements during the week included Vietcombank (VCB) declining by 3.3 per cent, Masan Group (MSN) dropping by 3.4 per cent, and Sabeco (SAB) decreasing by 2.4 per cent, which exerted downward pressure on the market. Conversely, the market's recovery was led by Vingroup (VIC) with an 8.1 per cent increase, Hoà Phát Group (HPG) rising by 5.6 per cent, Vinhomes (VHM) climbing by 4.4 per cent, and Vietinbank (CTG) advancing by 5 per cent.

The market's recovery was accompanied by increased liquidity, with the average transaction value surging by 27.5 per cent compared to the previous week, reaching VNĐ20.3 trillion.

Foreign investors turned back to net selling across all three exchanges last week, with a focus on HOSE, where they sold stocks worth VNĐ1.2 trillion. In contrast, foreign investors continued their net buying on HNX and UPCOM, with values of VNĐ240 billion and VNĐ47 billion, respectively. Overall, foreign investors net sold VNĐ930 billion during the trading week.

According to Phạm Bình Phương, a senior analyst at Mirae Asset Securities Joint Stock Company, after surpassing the 1,100-point mark, which also serves as the 20-day moving average resistance level, selling pressure triggered a correction in the VN-Index during the weekend session.

Regarding the macro-economic situation, Saigon - Hanoi Securities Joint Stock Company (SHS) noted that the last quarter of the year typically experiences heightened economic activity, with GDP showing signs of recovering growth momentum, even if the growth rate falls short of expectations.