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Bottom-fishing expected to lift up market

Update: May, 02/2018 - 09:00
VNDIRECT Securities Corporation’s headquarters during the holiday in Hà Nội. — VNS Photo Việt Thanh
Viet Nam News

HÀ NỘI — The market seems to be finding its bottom soon, offering investors opportunities to accumulate stocks, helping the indices rebound from a drop last week.

The benchmark VN-Index on the HCM Stock Exchange (HOSE) gained 0.52 per cent to close at 1,050.26 points. But its previous dive of 3.32 per cent on Thursday still left the VN-Index down 6.21 per cent week on week.

After rising 19.3 per cent in the first quarter, the VN-Index experienced a downward correction period in April with a decrease of 10.6 per cent. This was the strongest drop of the VN-Index in the past seven years and also the second April to witness a fall of over 10 per cent, the first being in 2007 with a fall of 13.8 per cent, causing the market to lose about US$15 billion in market capitalisation.

The HNX Index on the Hà Nội Stock Exchange (HNX) recouped 2.1 per cent to end at 122.64 points, recovering from the previous fall of 4.9 per cent. Like the benchmark index, the HNX Index finished lower from the previous week by falling a total of 7.5 per cent after four trading days.

An average of 257.1 million shares were traded in each session of the last trading week, worth VNĐ7.4 trillion (US$323 million). The figures were up 6.5 per cent in volume and down 4.9 per cent in value compared to the previous week.

Market expert Ngô Quốc Hưng at MB Securities Joint Stock Company (MBS) said in April, many large-caps in the banking and securities sectors saw slumps of 16 to over 20 per cent. For example, in April, Vietcombank and Vietinbank dropped 21.4 per cent and 19 per cent, respectively. Meanwhile, during the month, Sài Gòn Securities Incorporation (SSI) and Hồ Chí Minh City Securities Corporation (HCM) both dropped 16 per cent.

Hưng said after a stock reduction in the range of 18 to 20 per cent, there would be a recovery and thus an opportunity for investors to accumulate stocks in their portfolio.

The decline of the stock market in Việt Nam was merely a sharp correction after a long period of strong performance and pressure of high level of borrowing margins of investors, Hưng told

In general, the downtrend of the stock market does not originate from information on economic growth factors or corporate profits. The pictures of the macro-economy and corporate profits among firms still remain bright, supporting the long-term uptrend of the market, he said.

“I think that the market will recover after the holiday due to investors’ continued optimism,” Hưng said.

Nguyễn Hồng Khanh, head of market analysis at Sacombank Securities Company (SBS), said when the market saw sharp rises in trading liquidity, securities firms tend to expect high profit growth. And when the expectation goes too far, the true value of the stock is amplified.

Therefore, when a strong correction starts, it is the market’s pillar stocks that will be affected first, Khanh said.

In the medium term, some sectors such as banking, securities, consumer goods, retail and electricity are forecast to continue to grow well, he added.

“Compared to the beginning of the year, the VN-Index increased by 5.5 per cent. This is a modest figure compared to the same period in recent years and I think investors should begin to accumulate stocks,” Khanh said.

According to Bảo Việt Securities (BVSC), the market continued to witness strong volatility after two previous bearish sessions on Monday and Thursday.

BVSC said in its daily report that investors are pessimistic about heavy selling pressure in the low price range. However, the Friday session opened up a chance of a recovery for the VN-Index after the long holiday period which started on April 28 and ended on May 1. — VNS



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