The stock market needs more support to improve liquidity.

The market experienced another week of declines, although the magnitude of the drop was significantly narrower than the previous week. While there was a fairly positive return of capital after the corrections, it mainly flowed into small-cap, highly speculative stocks. At the end of the trading week, the VN-Index fell 5.51 points (-0.44%) to 1,236.6 points. The HNX-Index fell 5.1 points (-2.15%) to 231.56 points. Liquidity on both exchanges improved compared to the previous week, with trading volume increasing by 8.95% on the HOSE and nearly 19% on the HNX.

According to experts, market fluctuations last week were partly influenced by aggregated information from the Q2/2024 financial reports of securities companies, showing that total margin debt reached a new peak of nearly 230,000 billion VND, higher than the market's peak debt at the beginning of 2022. In addition, negative news from international stock markets caused many investors to trade with anxiety, even panic, as the VN-Index continuously declined, breaking through the 1,240-point support level, at times falling below 1,220 points. Investors feared a sell-off effect would occur amidst high margin debt and increased pressure from margin calls.

Typically, when a widely recognized technical support level, such as 1,245-1,250 points, is easily breached, a sell-off often ensues. However, the market's reaction at the end of last week's trading session showed that the leading investors were not overly concerned about that technical level when deciding to withdraw from the market; in fact, they may have exploited that psychological level to disrupt the positions of short-term traders.

Investors and experts remain confident about the market outlook for the next 2-3 months, based on stable domestic and international macroeconomic conditions, the approaching Fed interest rate cut, and projected continued improvement in corporate earnings growth in the final quarters of the year. The recovery in the overall economic outlook will boost earnings growth for listed companies.

Several securities firms' analytical reports estimate that market profit growth will be around 20% and 15% in 2024 and 2025, respectively. In 2024, after a modest increase of only 5.3% in the first quarter, the market's net profit is estimated to increase by 9.5% in the second quarter, 33.1% in the third quarter, and 21.9% in the fourth quarter.

Sectors projected to experience strong profit growth in 2024 include: banking, retail, construction materials, and electricity. Technically, if the VN-Index recovers the 1,250-point mark, a new upward trend is likely to form.