Stock Market Drops Below 1,800 Points; Investors Advised to Avoid Bottom-Fishing

Vietnam's stock market experienced a significant downturn on June 8, with the VN-Index closing below the crucial 1,800-point threshold at 1,790.53. This decline was influenced by a confluence of global and domestic pressures, prompting caution among investors.

Market analysts attribute the adjustment to two primary factors. Firstly, a resurgence in U.S.-Iran tensions has heightened global risk aversion, mirroring a broader market sell-off across various asset classes, including Nasdaq, gold, and Bitcoin. Concerns about inflation resurfacing due to rising oil prices, coupled with anticipated aggressive interest rate hikes by the U.S. Federal Reserve, have created a negative sentiment impacting global liquidity and Vietnamese markets.

Secondly, the high valuations of technology and AI stocks worldwide have made them sensitive to adverse news. In Vietnam, the market's performance was further impacted by adjustments in major Vingroup stocks. This combination of global economic uncertainty and specific domestic market dynamics has led to increased investor caution.

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Investors should not try to guess the market bottom. For investors using margin, the top priority is to manage the portfolio to avoid being liquidated if the market continues to be negative.

Financial experts advise investors against trying to predict the market's bottom. For those using margin, prioritizing portfolio management to avoid forced selling is paramount. Investors without margin are encouraged to reassess the fundamental strength of their holdings, as solid companies are expected to recover faster. Those with high cash reserves may find opportunities in the current pessimistic sentiment, but a strategy of regular, staggered investment in fundamentally sound companies at attractive valuations is recommended over attempting to catch a falling knife.

Technical analysis suggests the VN-Index has fallen below its 50-day moving average. Short-term pressure is expected to continue as the market seeks a new equilibrium, potentially around the 1,745-point level, which is considered a key support for the medium to long-term trend. Analysts recommend cautious trading and waiting for market volatility to narrow and stabilize before making significant moves, while maintaining a reasonable stock allocation and avoiding chasing rallies in a weakening short-term trend.

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In the short term, the index may continue to face adjustment pressure to find a new equilibrium. The 1,800-point area is likely to act as a near-term resistance area after being breached.