Domestic stocks in the last week of July and early August 2024 had sharp declines and then reversed and recovered, helping many investors regain some composure. However, the fact that global stocks were flooded with red last weekend due to concerns about the US economic recession and increasing geopolitical instability made domestic investors uneasy.
Trend cannot be confirmed yet
Referring to the developments in the domestic stock market last weekend, Mr. Do Bao Ngoc, Deputy General Director of Vietnam Construction Securities Company (CSI), said that the session of August 2 was the last day that 9 ETE funds referenced by the VN-Diamond and VNFIN Lead indices closed the restructuring period of July 2024. These funds bought a lot of bank stocks, securities... - which greatly affected the general market.
"This is one of the reasons why VN-Index recovered strongly at the end of the session, while stocks of other industry groups did not increase as much. Therefore, in the coming sessions, we must closely monitor market developments, especially observing supply and demand from investors' cash flow," said Mr. Do Bao Ngoc.
According to Mr. Phan Dung Khanh, Director of Investment Consulting - Maybank Securities Company, with the developments of the stock market last weekend, it is not possible to confirm the upcoming trend. Because the important factor for the market at this time is that liquidity (cash flow) is still very weak; foreign investors are still net selling tirelessly.
"The pressure from rising deposit interest rates, soaring gold prices and record outstanding loans from securities companies... are also factors affecting the VN-Index. Currently, the 1,180 - 1,200 point range is the market's medium-term support zone," said Mr. Phan Dung Khanh.
Will the news that many stock markets around the world have plummeted in the last two sessions of the week put pressure on the VN-Index early next week? Dr. Ho Quoc Tuan, University of Bristol (UK), said that the correction of major stock markets, including the US market, even by 5%-10% is reasonable, because they have increased too strongly and there is not much room for growth. Other investment channels such as gold, USD, oil... are attracting more cash flow.
According to Mr. Ho Quoc Tuan, in general, the decline of many international financial markets compared to last month is not too negative, except for the Japanese market. "If the US economy weakens, the cash flow into emerging markets, including Vietnam, will also be affected. Because Vietnam has a highly open economy. Geopolitical instability in the world will negatively affect Vietnam because the growth rate of trade will decrease" - Dr. Ho Quoc Tuan assessed.
The green color of the Vietnamese stock market on August 2 helped investors regain their composure after the previous decline. Photo: Le Tinh
Struggled around the 1,200 point area
Many investors are wondering why, despite positive domestic factors (national economic data for the first 7 months of the year, business results in the second quarter and the first half of 2024 of many listed companies are all positive...), stocks are still falling? Not to mention, the last barrier for Vietnamese stocks to be upgraded to emerging market status is gradually being removed as the regulatory agency is about to eliminate the pre-funding requirement for foreign investors.
According to experts, the above information has actually been reflected in the previous increase in stock prices. In fact, in July, many small-cap stocks (penny, midcap on Upcom) despite not having good fundamentals still increased by 50%-100%, even 200% in a short period of time, so the recent decline is understandable. This caused cross-collateral selling pressure from sources outside the securities company, causing the VN-Index to fall sharply.
Regarding the fact that the VN-Index has gone through many ups and downs and has been struggling at the 1,200 point level for the past decade, Mr. Do Bao Ngoc analyzed: In recent years, the Vietnamese economy has been negatively affected by many issues such as the COVID-19 pandemic, economic downturn, frozen real estate market, difficulties of domestic enterprises... These factors have caused the Vietnamese business system to not recover strongly, so the domestic stock market has remained sluggish.
Mr. Do Bao Ngoc commented: "The nature of the stock market in recent times has been heavily speculative, with very little investment. Therefore, in the past 2-3 years, the Government and state management agencies have been very determined in purifying and cleaning up the stock market."
According to Mr. Ngoc, many stocks of enterprises on the HNX and UpCoM exchanges today are no different from "trash stocks" because they have no fundamental foundation, the enterprises do not operate systematically, and even mobilize capital from investors to "hit the jackpot". Over time, this causes a loss of confidence, from which many people do not invest long-term in the stock market but mainly speculate and invest short-term...
"Therefore, it is necessary to increase the quality of goods and products... of listed enterprises, especially to clean up the stock market so that effective enterprises can attract capital and create trust for investors," said Mr. Ngoc.
Profitability is still good
Mr. Nguyen The Minh, Director of Analysis - Yuanta Vietnam Securities Company, said that technically, VN-Index is falling into the oversold zone. After deep corrections, the market P/E (valuation level) has reached 13.5 times, the bottom level of April. The projected P/E in 2024 also decreased to 11.5 times, showing that the stock yield is very high, at 9% -10%.
"From now until the end of the year, it will be very difficult to find an investment channel with a high rate of return like stocks. In addition to being attractively priced, with the high possibility that the US Federal Reserve (FED) will lower interest rates in September and the exchange rate will cool down, foreign investors will no longer have a reason to sell heavily in the Vietnamese stock market and will soon return to net buying. If the VN-Index touches the 1,200 point zone, it will also bring a good disbursement opportunity for investors to catch up with the upcoming uptrend," Mr. Minh analyzed.
Source: https://nld.com.vn/ky-vong-thi-truong-chung-khoan-het-i-ach-196240804191636422.htm
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