Shares to correct amid lack of positive news

A share auction is held at the Ha Noi Stock Exchange. An average of nearly 43.6 million shares were traded on the northern exchange during each session last week, worth VND420 billion.-VNA/VNS Photo Tran Viet

The benchmark VN-Index on the Ho Ch Minh Stock Exchange (HoSE) gained 0.62 per cent to close Friday at 847.61 points.

The index had lost a total of 0.51 per cent last week.

An average of nearly 296 million shares were traded on the southern exchange during each session last week, worth VND4.5 trillion (US$194.2 billion).

According to Tran Xuan Bach, a stock analyst at Bao Viet Securities Co, VN-Index is forecast to experience volatility and correction at the resistance of 848-853 points early next week.

“The market is still facing short-term declining pressure with the release of Q2/2020 business results of listed companies, which are expected to fall under influences of the COVID-19 pandemic. These influences may negatively affect stock price movement,” Bach said.

“The Vietnamese stock market is entering a phase of slight fluctuation with decreasing liquidity,” said Nguyen Anh Khoa, specialist at Agribank Securities Co (Agriseco).

“There is an absence of supportive information amid the context that stimulus packages can no longer fuel market sentiment and boost investor confidence. These, together with the initial estimates of damage inflicted by the disease, will undermine the business results of companies in the second quarter,” said Khoa.

According to Hoang Thach Lan, Rong Viet Securities Corp’s head of individual investor division, stock prices may struggle this week with the VN-Index forecast to drop further.

“The escalating trade conflicts between US-China and China-India as well as the damage caused by COVID-19 has impacted global trade, economies and financial markets, dimming the forecast for global economic growth this year and triggering political instability in many nations,” Lan said.

“Investors are very prudent and cautious at the moment,” he added.

Tran Xuan Bach, stock analyst at Bao Viet Securities Co, said stock exposure should be maintained at below 25 per cent of the portfolio, prioritising medium- and long-term positions.

“Investors this week should watch out for the wide divergence among stock sectors. Those with high stock proportion should consider lowering stock exposure at our aforementioned resistance,” Bach said.

According to the Viet Nam Securities Depository, the tumble of the local stock market as the COVID-19 pandemic ravaged economies has led to a massive surge in new trading accounts opened by punters seeking to bottom fish from a giant market slump.

They sought to accumulate beaten-down stocks in the massive sell-offs during the peak of the pandemic.

By the end of June 2020, domestic and foreign investors have opened more than 2.5 million securities accounts.

More than 35,000 new accounts were opened by domestic investors in June, a slight increase of 3 per cent compared to May. This is the 4th consecutive month the market saw over 30,000 newly opened securities accounts.

Over the last four months, domestic investors have opened nearly 137,800 securities accounts, equivalent to 73 per cent of the total number in 2019.

“The penetration of new investors plays a relatively important role in the strong recovery of Viet Nam’s stock market, from 650 points at the end of March to the current level,” said Khieu Trong Huy, a stock analyst at Bao Viet Securities Co.

“The proportion of transactions of domestic individual investors has been increasing in recent months, to about 76.4 per cent and 78.6 per cent in May and June from only about 72 per cent at the beginning of the year.

“However, the rise of domestic individual investors in recent weeks could also be a negative sign to the market with the weakening demand from foreign investors. Therefore, the market will need new supportive factors to maintain its growth,” Huy said.

On the Ha Noi Stock Exchange, the HNX-Index also declined 0.05 per cent to close Friday at 111.55 points.

The index had declined 1.67 per cent last week.

An average of nearly 43.6 million shares were traded on the northern exchange during each session last week, worth VND420 billion.