As selling pressure built up despite positive macro economic news late last week, stock brokerages have forecast the market might not maintain its rally and that liquidity would stay low in the coming time.
Ending the week, the VN-Index dropped by 1.7% and while the HNX-Index ended 0.2% lower than last Friday’s close. Overall, total trading on the two exchanges slumped 27% in volume to just 346 million shares and 32% in value to VND4.1 trillion.
HCMC Securities Corp. (HSC) said developments on both markets last Friday were within expectations. Profit taking after Thursday’s sharp gains on the Hanoi market was always a clear risk given the normal temptations of a Friday market and the lack of any additional or obvious motive for buying other than announcement of the HNX30 components.
Meanwhile, the southern market saw support returning last week at the 50% retracement line on which VN-Index would move around 410 and 412 points.
“Our feeling is that we may drift lower from the middle of next week again with weak volumes and a lack of any fundamental reason for buying right now pushing us down again. This is still a summer market after all and while we await signs of a recovery in the economy, a sideways and down drift remains the primary trend for now,” HSC predicted.
“Even so selling pressure remains tempered and buyers are poised at lower levels. Hence, our advice to investors remains buying on weakness, especially when the VN-Index drops back towards the 410 to 412-point level. But not to chase up prices as the next few weeks will present us with ample buying opportunities at slightly lower prices in our opinion.”
Meanwhile, with the announcement of the HNX30 Index on Thursday, Viet Capital Securities Co. said it had expected trading on the northern bourse to be a bit more brisk prior to the official launch of the index on Monday. The slow trading on the northern bourse last Friday could suggest that the HNX30 Index will be a non-factor.
Viet Dragon Securities Co. in its July strategic report said there would be no supporting factors for short-term recovery this month and the market would continue to see a tendency of accumulation.
The VN-Index will probably fluctuate between 400 and 450 points in July and the month is only suitable for medium- to long-term investors, who can consider buying stocks when the VN-Index drops to around 400 points, it said.
The Saigon Times Daily