The week from January 29 to February 2 was one of good news. FDI (foreign direct investment) kept flowing to Vietnam, which shows foreign investors’ confidence in the economy.

Meanwhile, FTAs (free trade agreements) and relationships with the world’s largest economies, including the US, China, India, the EU and Japan have been upgraded to a new high, turning Vietnam into a magnet for international cash flow.

Registered FDI capital in January 2024 increased by 40 percent over the same period last year, while implemented FDI rose by 9.6 percent. The IIP (index of industrial production) and imports-exports all have improved significantly.

Export turnover in the first month increased by 4 percent over the same period last year, while import turnover rose by 6.8 percent.

The government is accelerating public investments with highway and airport projects, requesting investors to speed up electricity generation projects. Prime Minister Pham Minh Chinh last week inspected the construction site of the 500KV transmission line Circuit 3 (Quang Trach – Pho Noi). 

There was also good news about production indexes. Vietnam’s PMI (purchasing managers’ index) surpassed the 50 point threshold for the first time in the last five months. Meanwhile, the dong/dollar exchange rate in the domestic market decreased from VND24,700-24,800 per dollar to VND24,520 (Vietcombank’s selling price on February 5).

The US Federal Reserve (FED) decided to maintain interest rates at its January meeting at the 23-year peak of 5.25-5.5 percent, while predicting that the possibility of an interest rate cut is not high. This won’t have a negative impact on Vietnam.

The increases in FDI and import/export turnover, plus public investment and power projects, have affected industrial real estate, building materials, electricity, and export companies. Cash flow has been driven to these fields.

In the stock market, profit-taking was the trend last week. In general, investors want to sell stocks to collect cash before the Tet holiday. This explained the slight decrease of 0.3 percent of the VN-Index to 1,172.6 points. The HNX-Index increased by 0.5 percent to 230.6 points. The UpCom-Index went up by 0.8 percent and closed at 88.4 points.

Sell or collect stocks, or wait for new investment wave?

Dinh Quang Hinh from VnDirect Securities noted that the market experienced a week of full events amid the upcoming Tet holiday. Many investors tried to sell stocks to collect money, and others kept working diligently, collecting shares when the prices became reasonable. This kept the market busy on the days before Tet.

Some analysts think that investors with large amounts of cash can take full advantage of price fluctuations to hoard good shares for the medium and long term.

Many large corporations have reported impressive business results, including HoaPhat Group (HPT), Masan, and FPT.

Foreign investors had a net purchase of trillions of dong last week. They focused on collecting shares of AIC, a construction company, on UpCom. Other shares catching special attention from foreign investors included PNJ, SSI, HPG, PDR, STB and NVL. Meanwhile, investors sold more than they bought of VRE (Vincom Retail), VHM (Vinhomes) and VIC (Vingroup).

CSI Securities believes that after the rain, sun will shine again. The strong liquidity increases of shares in some business fields showed positive signs prevailing. CSI believes that the VN-Index was moving towards the resistance threshold (1,200-1,210 points) before Tet.

Hinh believes that investors should consider buying shares at trading sessions just before Tet when the prices are reasonable. This move may allow them to make a high profit thanks to positive news about the macro economy, including a PMI of over 50 points and a downward trend in inflation and interest rates. 

Particularly, the dong/dollar exchange rate increase recently has ebbed, thus helping ease pressure on some investors. Cash flow, especially from domestic individual investors, is expected to come back after Tet, thus pushing stock indexes up.

Manh Ha