Despite a sharp rally last Friday, securities firms hold a cautious view, predicting stock markets would correct early this week because of strong resistances on the indexes of the southern and northern bourses.
Ending last week, the VN-Index erased some earlier losses and inched up a slight 0.3% to close at 398.87. The HNX-Index, however, still lost nearly 2% and was near its 59-60 resistance range.
Viet Capital Securities Co. noted there was a foreign net buying amount of VND106 billion compared to VND165 billion of the previous week on the Hochiminh Stock Exchange. On the northern bourse, foreign investors net bought around VND25 billion against VND17 billion a week earlier.
“But perhaps the most positive trade data we have seen so far is that there was about 27 million unmatched buy orders at the end of last Friday’s session, the strongest indicator of demand in the last couple of weeks,” it said.
HCMC Securities Corp. (HSC) said although it was easy to link last Friday’s gain on strong gains in world markets, the fact was that the local market has a very low degree of correlation with what was happening in global equity markets. It is much more likely that the reasons for the positive change of heart are domestically driven.
“The Prime Minister seems to have convinced more than a few investors that Vietnam doesn’t need any sort of bailout from the IMF or ASEAN. Furthermore, the government leader announced that forex reserves have increased to some US$23 billion, which would indeed be a huge increase compared to the US$14 billion or so at the end of 2011,” HSC said.
It is also likely that the turmoil of the past week is having less of an impact on investor sentiment as the novelty aspect of the arrest gradually disappears. And in that case, the economic rationale takes over once again. In that respect, very few things have changed over the past weeks. Valuations remain at attractive levels at least for large numbers of the listed stocks on a fundamental basis as well as from a historical perspective.
“It seems that we have now entered the stage where the absence of bad news alone is enough to push prices higher. In that case, it is possible that we could see a significant rally over the coming weeks. But again, the situation remains fragile and risk-averse short-term players remain likely to get out as soon as there is any piece of bad news. Weakness should, therefore, be considered an opportunity for longer term investors,” HSC added.
The Saigon Times Daily