Securities firms cautious on directionless stock market

July 26, 2021 - 07:30
FPT Corporation's headquarter in Cầu Giấy District, Hà Nội City. The company shares went against the market's trend, up 4.3 per cent in market capitalisation last week. Photo

HÀ NỘI — Việt Nam’s stock market struggled to find direction last week as liquidity fell continuously and foreign investors net sold a value of more than VNĐ2.22 trillion (US$96.6 million), causing analysts from securities firms to have cautious views of the market this week. 

On the Hồ Chí Minh Stock Exchange (HoSE), the market benchmark VN-Index inched down in the last trading session to 1,268.83 points, while the HNX-Index on the Hà Nội Stock Exchange (HNX) plunged to 301.77 points. 

For the week, the VN-Index lost 2.34 per cent and the HNX-Index plummeted 1.95 per cent. Both benchmarks had declined more than 4 per cent since the close of trade Monday. 

The liquidity on both exchanges declined compared to the previous week. It was lower than the recent 20-week average, with a value of VNĐ20.5 trillion per session.

The trading value on the HOSE decreased by 5.2 per cent to VNĐ91.54 trillion, equivalent to a drop of 4 per cent in trading volume to nearly 2.86 billion shares. 

On HNX, the trading value reduced by 18.9 per cent to VNĐ11.2 trillion, the equivalent of a fall of 22.1 per cent in volume to 498 million shares.

According to Vietcombank Securities Company (VCBS), even though the market liquidity was subdued, the losses were not much, showing cautious sentiment of investors and low bottom-finish demands amid the complexity of the ongoing COVID-19 outbreak. 

The market started to witness a clearer division between stock groups as mid-cap stocks rose against the general downward trend, especially in real estate and seaports. 

“A new price base is gradually formed around 1,270 point-level,” VCBS said. Investors should consider restructuring their portfolios and gradually disbursing target stocks with small proportions, but following investment disciplines and avoiding chasing in rally sessions, the securities firm added. 

“We still expect that there will be more new investment opportunities when the market benchmarks are stabilised,” VCBS said. 

“Therefore, the disbursement at the moment should focus on medium and long-term investment opportunities, with the expectation of positive business results of enterprises in the second half of 2021.”

Analysts from BOS Securities Corporation said that technically, the VN-Index dropped sharply and fell below the support zone of around 1,280 points in the last trading session. This causes technical indicators to continue to show the dominance of the downtrend in the short-term.

There is a possibility that the VN-Index will continue to correct in the early sessions of this week and might test the old bottom of around 1,220 - 1,230 points again. 

BOS also recommends investors prioritise risk management and only disburse for short-term targets when there is a clear sign of recovery.

Similarly, Viet Dragon Securities Corporation (VDSC) said that the benchmark VN-Index slid back to the territory of ​​1,265 - 1,275 points in the last session. Liquidity was higher than that of Thursday trade, showing rising short-term profit-taking pressure. However, the pressure was not great enough and it is necessary to wait for more supply and demand signals at the level of around 1,270 points.

“Due to the sensitivity of the market in the near future, investors should observe trading movements and keep their portfolios at a balanced level,” VDSC recommended.

Meanwhile, Saigon - Hanoi Securities JSC (SHS) is more optimistic when it comes to the market this week. On the technical front, with the end of the last trading session above the support level of 1,260 points, the VN-Index still has the ability to recover this week and head toward the 1,300 point-level. However, the market is likely to struggle in the first session of the week. 

SHS said that the losses of most of the stock groups were driven by the market’s correction. Of which, bank stocks posted the biggest losses in market capitalisation, down 4.8 per cent, with all the big names plunging more than 1.5 per cent.

It was followed by consumer service stocks, down 2.5 per cent. 

On the other hand, information technology stocks were the biggest gainers last week, up 3.4 per cent in market capitalisation, with FPT Corporation rising 4.3 per cent. VNS