Billion dollar transactions return, investors still "hold" their wallets tightly

Billion Dollar Deals Are Back

The operating interest rate is continuously adjusted by the State Bank. From June 19, the ceiling interest rate for mobilization is only 4.75%/year, causing the mobilization and lending interest rates to decrease sharply. At many banks, the highest rate is only 6.3%/year for long-term and 3.4%/year for short-term.

The decrease in deposit interest rates makes the savings channel less attractive. Investors are expected to look for alternative channels to earn better profits. While gold and exchange rates continue to decline, stocks are the most promising channel.

Since the beginning of June, more money has flowed into the market, and the Ho Chi Minh City Stock Exchange has witnessed the return of billion-dollar trading sessions.

Return on Investment Investor Advisory Keep Quality for Futures 1 — Although interest rates have dropped sharply and billion-dollar transactions have returned, investors still do not dare to "go all in" because of many concerns. Illustrative photo

Specifically, on June 8, 2023, on the Ho Chi Minh City Stock Exchange alone, nearly 1.3 billion shares, equivalent to VND 23,545 billion (equivalent to USD 1 billion), were successfully traded, an increase of 324 million shares, equivalent to 33.2% in volume and an increase of VND 5,552 billion, equivalent to 30.9% in transaction value compared to the previous session.

After that, the transaction value on the Ho Chi Minh City Stock Exchange continuously decreased, at one point reaching only over VND13,000 billion, meaning a decrease of nearly half since the "peak" set on June 8. It was not until June 16, 2023, that the transaction value approached the billion-dollar mark when it reached VND22,185 billion, equivalent to a trading volume of 1.14 billion shares.

On average, from June 1 to June 22, the average trading volume per session on Hose reached 900 million shares, equivalent to VND 16,940 billion.

Thus, compared to May, trading volume per session increased by 283 million shares, equivalent to 45.9%; trading value increased by VND 6,329 billion, equivalent to 59.6%.

Investors still "hold tight" on their wallets

It can be seen that after the billion-dollar trading session on June 8, investors have restrained their excitement even though interest rates continue to be adjusted downward.

According to Mr. Vo Xuan Thien, Securities Investment Consultant at SSI Securities Company, looking cautiously, interest rates are on a downward trend, securities reflect expectations, but the financial picture of businesses is not very bright.

The real estate group is still struggling with the bond debt story, the manufacturing group such as retail, textile, seafood is negatively affected by weak demand. The price trend of some goods such as cement and steel also does not support the business results of the industry.

If we consider the P/E valuation formula, if the price P increases when the market recovers while the business profit (E) does not increase correspondingly, or even the risk decreases due to the number of businesses planning to lose money. An increase in P/E implies that the market is more expensive.

Pyn Elite Fund manager Petri Deryng reiterated his view many times in a report sent to investors that Vietnamese stocks will improve in 2023 due to the plunge in 2022 that brought stock prices to a very cheap level.

If calculated from the time the market bottomed out in mid-November 2022, many stocks have increased in price many times, with some stocks increasing 3 or 4 times in just a few months. The current market price of many stocks is still much lower than the peak established before. If still holding stocks when the VN-index was at 1,500 points, many investors are still suffering a loss of over 50%.

“In the future, the rapid price increase from the bottom will create a “bird afraid of the curved branch” mentality. Some investors are worried about short-term stock reversals when buying new stocks, while stocks are likely to reverse immediately after selling at a loss to restructure the portfolio,” Mr. Thien said.

Besides, foreign investors expect that the bad news has passed and the stock market will change positively, but that is not enough to confirm a good state for investment activities. Because fundamental factors such as macro and financial capacity of enterprises are still the first priority.

Vietnam's GDP growth in the first quarter was only 3.3%, a low figure compared to the average of 6% in recent years. Export activities decreased by 11.5% in the first 5 months of the year but were more positive in May when they decreased by only 5.9% compared to the same period in 2022.

Weak export activities caused businesses in this group to report low profits for two consecutive quarters.

However, a bright spot for Vietnam's macro economy is that inflation remains moderate and the government's policy decisions have a positive impact on domestic demand.

Source