Market to enjoy gain thanks to supportive information

Outside the Ho Chi Minh Stock Exchange in HCM City. Share performance would be fueled by upbeat market sentiment as anti-coronavirus measures taken by Vietnam had proven effective. - Photo thitruongtaichinhtiente.vn

The benchmark VN-Index on the Ho Chi Minh Stock Exchange exceeded the 800-point landmark, climbing 2.16 per cent to close Friday at 813.73 points.

The index had rallied a total of 5.8 per cent last week.

An average of more than 276.5 million shares were traded on the southern exchange during each session last week, worth VND5 trillion (US$216.4 million).

Share performance would be fueled by upbeat market sentiment as anti-coronavirus measures taken by Vietnam had proven effective, emboldening investors, said Hoang Thach Lan, head of the individual investor department at Viet Dragon Securities Co (VDSC).

As of Sunday, Vietnam had reported no new COVID-19 cases via community transmission over the past 24 days, though 17 new imported cases were reported, leaving the total at 288 with no fatalities.

According to BIDV Securities (BSC), after nearly one month applying social distancing orders, some countries have gradually restored economic activities to normal operation.

Investor optimism is bolstered by hopes that the COVID-19 pandemic is plateauing in some global hot spots as the disease is nearing its peak.

In Vietnam, the stimulus package of VND63 trillion has started to be disbursed, which would be a supporting factor for the business community and the stock market, BSC said.

There was also a good news for investors last week as the Ministry of Finance announced that it was cutting fees for most securities services by half.

The ministry issued Circular No. 37/2020 stipulating securities services fees to support businesses hit hard by the COVID-19 pandemic.

From now till the end of the year, 20 of 22 securities fees are subject to a 50 per cent reduction.

From January 1, 2021 onwards, all charges and fees will return to normal levels.

“VN-Index is forecast to face correction pressure early this week before rebounding by the end of the week,” said Tran Xuan Bach, a stock analyst at Bao Viet Securities Co (BVSC).

“After penetrating through the previous peak at 795-800 points, VN-Index may possibly experience a throwback to this area. If successfully retesting this support, the index may be able to expand its recovery toward 845-860 points in the short term.”

“Foreign investors’ net buying on Friday after a long period of net selling also helps excite the market, thereby relieving pressure on VN-Index’s recovery,” Bach said.

“However, businesses’ potential adjustments in 2020 business plans amid the COVID-19 pandemic and Q2 business results below expectation may negatively influence the index movement,” he added.

“Stock exposure should be maintained at 25-35 per cent of the portfolio. Investors holding cash may consider opening buying positions at support 790-800 points,” he said.

“Investors should take profits from short-term positions at market’s resistance 820-825 points and 845-860 points,” Bach said.

The stock market may also get an added boost from new cash flow created by the newly-opened trading accounts in April, according to the Vietnam Securities Depository (VSD).

VSD said that domestic investors rushed to open trading accounts in the context that Vietnamese stock market suffered severe losses due to the impact of the COVID-19 pandemic.

Domestic investors opened 36,721 new securities accounts in April 2020, up by 5,000 accounts against last month, VSD said.

In March, the VN-Index witnessed a record reduction of 24.9 per cent, only behind the fall of 34.34 per cent in August 2001. However, 2001 was an early stage of Vietnamese securities with a small market size as well as limited numbers of investors.

Therefore, it can be considered that March 2020 experienced a historic decline of Vietnam's stock market, VSD said, adding that the tumble in March has attracted many people who have never invested in securities to open trading accounts to bottom fish.

This created a new cash flow to offset the strong selling force from foreign investors, VSD said.

According to VSD, in March, foreign investors opened only 146 accounts, the lowest number in the last three years.