Market lifted by central bank's pivot signal: expert

April 03, 2023 - 07:01
The State Bank of Vietnam is sending a message of loosening monetary policies to support businesses and the economy.
A trader taking a phone call while watching the market's movements. Photo

HÀ NỘI — The Vietnamese stock market logged another weekly gain last week and is expected to trade in a bullish trend in the coming quarters after the State Bank of Vietnam (SBV) signalled a pivot, said an expert. 

On the southern bourse, Hồ Chí Minh Stock Exchange (HoSE), the VN-Index finished last week at 1,064.64 points, marking the longest gaining streak of nine days since August 2021. Meanwhile, the HNX-Index on the Hà Nội Stock Exchange (HNX) traded at 207.5 points on Friday, which was also the last trading day of the first quarter. 

Both benchmarks rose for the second straight week, the former by 1.7 per cent and the latter by 0.86 per cent.

The stock market continued to receive supportive news from SBV last week, said Đinh Quang Hinh, Head of Macroeconomics and Market Strategy Department, VNDirect Securities Company. 

A representative of the central bank said at a conference on Friday that as of March 28, the country’s credit grew by 11.7 per cent on-year and 2.06 per cent over the end of 2022. And the credit has increased by nearly 1 per cent since March 9.

This showed the return of credit flows.

Moreover, the SBV will soon issue an official document to implement a credit package worth VNĐ120 trillion (US$5.1 billion) for property investors and home buyers of social housing projects, workers’ houses, and renovation and rebuilding of old apartment projects, the representative added. 

The central bank is also considering extending and delaying debt payments for businesses and will announce a specific plan within the next 1-2 days. 

It had cut the operating interest rates for the second time in a row in less than a month.

Despite the numerous challenges confronting the economy and businesses, the signals from SBV will have a positive impact on the outlook for the economy in general and the stock market in particular in the coming quarters, according to Hinh.

Historical data showed that stocks normally traded in a bull market during the period of monetary easing. Therefore, long-term investors could take advantage of the opportunities presented by correction sessions to increase the proportion of stocks, the expert said.

However, he noted that it takes a quarter of a year for monetary policies to have a positive impact on the market, so the stock market was not expected to increase sharply this week or next month.

For short-term investors, as the VN-Index was approaching the resistance zone of 1,060-1,080 points, they should be cautious and watch market movements in this area, Hinh said. 

He also recommended they maintain a moderate proportion of the stock portfolio as well as cash to be able to buy in during corrections while limiting the use of margin loans.

Phạm Bình Phương, an analyst from Mirae Asset Securities Vietnam, said that the persistent recovery helped the benchmark VN-Index overcome the resistance level of 1,060 peaked on March 15, and successfully move away from the bottom of 1,010–1,025 points set since the end of February. 

The securities firm expects the index to continue to inch towards the resistance zone of 1,080–1,100 points. Short-term technical signals are at a positive level.

MB Securities Company (MBS) said that the domestic market closed the first quarter with positive signals, from the index to the cash flow.

The VN-Index gained for two consecutive weeks and closed March with an increase of 3.9 per cent. The market liquidity in the last week of March also reached the highest level in five weeks, with an average of more than VNĐ11.7 trillion per session.

Entering April, the market will digest the macro data and business results of the first quarter. Technically, the VN-Index is on an impressive winning run and may test the resistance area between 1,070 and 1,073 points, according to MBS. — VNS