Macro uncertainties weigh on market this week: experts

March 06, 2023 - 06:49
Experts remain sceptical and believe that the VN-Index needs a long time to accumulate to create a bottom before returning to the uptrend.
Outside of the Hồ Chí Minh Stock Exchange's building in HCM City. Photo courtesy of HoSE

HÀ NỘI — The Vietnamese stock market continued to perform negatively last week with weak liquidity, despite optimistic macro data.

Experts remain sceptical and believe that the VN-Index needs a long time to accumulate to create a bottom before returning to the uptrend.

On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index closed the week at 1,024.8 points, while the HNX-Index on the northern bourse Hà Nội Stock Exchange (HNX) was at 204.9 points.

For the week, both benchmark indices set a weekly fall, with the former down 1.4 per cent and latter 1.2 per cent.

Last week, the market corrected despite the data showing that domestic inflation cooled down in February, and the manufacturing health index (PMI) recovered to above 50 points after three consecutive months below the threshold.

In the last two sessions of the week, the market dropped sharply after the news that the Ministry of Construction would suspend the proposal of a support package of VNĐ110 trillion (US$4.6 billion) and less positive news related to real estate and bank industries.

The market liquidity plunged with the trading value on HOSE decreasing by 31.5 per cent over the previous week to more than VNĐ37.6 trillion. The trading volume on the southern market also declined 29.9 per cent to nearly 2.3 million shares.

The trading value of the HNX slid 35.7 per cent to VNĐ4.36 trillion, resulting in a fall of 32.3 per cent in the trading volume to 291 million shares.

Foreign investors continued to net sell on the two main exchanges last week, with a net sell value of over VNĐ1.18 trillion.

Vietcombank Securities Company (VCBS) said that the nearest support level of the market was still around 1,020 points.

In a positive scenario, the VN-Index would test this level again and rebound. Short-term investors might consider opening an additional position of 10-20 per cent for the stocks already in the portfolio. On the contrary, if selling pressure gets stronger, causing the market’s benchmark to fall below the support area, investors should raise the proportion of cash to limit short-term risks.

In the medium and long-term, Saigon - Hanoi Securities JSC (SHS) believes that the market cannot create an uptrend in the short term, so the VN-Index requires a longer time for accumulation after forming a bottom to be able to create a new rally.

“The macro situation is still a riddle, especially in the credit and bond markets as well as the risk of a global economic recession and the further escalation of the Russia-Ukraine war. In general, the current stock price level is quite attractive for medium and long-term investment, on the other hand, there are many key shares moving actively like banking and technology stocks,” said SHS.

However, opportunities to disburse capital were low due to liquidity crunch, the securities firm added.

VNDirect Securities Corporation said that the global financial markets might focus on the meeting of the National People's Congress of China this week. This is the first National Assembly session of the world's No. 2 economy after China officially lifted the zero-COVID policy.

International observers said that during this session, China would form the country’s leadership team and set new growth targets for the post-COVID-19 period.

Markets are expecting that the Chinese Government will shift its policy direction to be more supportive for economic growth in the near future and the decisions of the Chinese leadership team will have a significant impact on the picture of global economic growth and international financial markets.

Investors should pay attention to groups of industries that are expected to benefit when China reopens and stimulates growth, such as rubber, seafood, cement, steel, and textile export industries, and groups of aviation and tourism, VNDIRECT recommended. VNS