VN-Index ended August at 1,224 points, unchanged compared to July. This movement ended the 4-month gain streak – which is the period that the monetary policy reversal effected the most on the stock market. The matched trading value on the HSX increased sharply by 34% compared to July with an average trading value of VND20.5 trillion/session (+22% MoM), since there was a sharp decrease session in the month with matching order value soared to VND 35 trillion. From that point to September 5, the indexes gradually recovered: VN Midcap recorded the best gain (+11.1 %) and surpassed the peak in August, followed by VN Smallcap (+6.4%), VN Index (+4.8%) and VN30 (+4.6%). The positive point is that this price movement was accompanied with a recovery in ADTV toward over VND20 trillion/session level.

In September, we expect following factors to positively affect the stock market: the meeting on solutions to upgrade Vietnam stock market to emerging market and the progress of implementing clearing and settlement activities under the central clearing partner mechanism of the SSC, deposit interest rates are expected to continue to lower, Macroeconomics to improve gradually since credit growth and manufacturing sector begin to post positive signals. On the contrary, the net selling trend of foreign investors may not end and may affect the performance of large-cap stocks, partly affected by the depreciation of VND. However, this factor was priced in since SBV chose to highly loosen monetary policy. Furthermore, the market participation rate of foreign institutional investors, whose trading behavior is highly related to exchange rates movement, is quite low and a improvement in PMI should maintain trade surplus condition.

We forecast that the uptrend of the market will remain intact, supported by the cash flow factor. Forecasted range of the VN Index in August is 1,210-1,280 points.