Positive outlook: A cyclist rides through the capital. The Hanoi Stock Exchange, on a recent downward trend, is expected to rebound in the coming weeks, say analysts. — AFP
HANOI: The Vietnamese stock market logged the second straight weekly fall last week, with the VN-Index breaking below the psychological level of 1,200 points. The bearish trend is expected to extend this week, say experts.
On the Ho Chi Minh Stock Exchange (HoSE), the VN-Index only gained on Sept 20 and lost for the rest of last week. The index closed the week at 1,193.05 points.
Similarly, the Hanoi Stock Exchange (HNX) experienced the same trend and last traded at 243.15 points.
For the week, both benchmark indices posted a weekly loss, with the former down 2.8% and the latter down 3.8%.
Liquidity on the two main exchanges also declined. In particular, on the HoSE, liquidity slid 11.1% in value to 118.5 trillion dong, and on the northern exchange decreased 5.5% to 11.66 trillion dong.
Foreign investors net sold strongly for the fourth consecutive week, focusing on stocks in the steel, banking, financial services and securities industries. They net sold a total of nearly 1.7 trillion dong, on both exchanges.
Dinh Quang Hinh, head of the Macro and Market Strategy Department of VNDirect Securities Co, said that the market would be able to stabilise and recover soon, so investors should consider increasing the proportion of stocks ahead of the third quarter business results reporting season.
The country’s stock market was under selling pressure, following less positive developments in the global stock markets, as well as exchange rate issues in the domestic market.
The State Bank of Vietnam (SBV) has issued treasury bills to absorb excess liquidity from the banking system and stabilise the exchange rate, limiting foreign exchange speculation.
However, many investors took negative views and were concerned that this was a tightening move by the central bank.
“In fact, I think that this step by the SBV is not a step to tighten or reverse the current loosening policy, but is only a temporary, short-term solution to absorb the surplus liquidity to help limit exchange rate speculation,” Hinh said.
“The move also aims to neutralise the State Treasury’s previous purchase of foreign currency and injection of dong into the market.
“The central bank itself said that it would continue to carry out solutions to maintain liquidity for the banking system to support the economy. Therefore, I think the market can soon reconsider the recent move of issuing T-bills by the SBV,” said Hinh.
The market sentiment may stabilise again after talk related to the HoSE’s leadership and the adjustment of the margin portfolio of a top securities company are clarified, Hinh said.
He added that the third quarter business results reporting season is approaching with expectations of more improvements.
A positive performance is expected to support the market in the next few weeks.
According to Hinh, investors can take advantage of the corrections to restructure their investment portfolios and increase the proportion of stocks when the VN-Index reaches the support zone of 1,170 to 1,180 points.
However, he suggested prioritising businesses whose business results will change positively in the last two quarters of the year, such as exports (seafood, wooden furniture and chemicals), retail and public investment (construction and construction materials).
Vietcap Securities JSC said that the VN-Index was likely to continue rebounding to retest the resistance area around 1,200 points.
If the demand force is strong enough to help the index move above this level, the market will have opportunities to return to upward momentum soon, according to the company. — Viet Nam News/ANN
