Securities firms expect the stock markets to continue the rally this week as the VN-Index closed the final trading week ahead of the Lunar New Year holiday, or Tet, with a positive note.
On February 8, after struggling for a while in early trade, the VN-Index beat the 490-point resistance to settle at a two-year high of 494.03. Meanwhile, the penny stock-laden and more volatile HNX-Index marched onwards after breaking the resistance at 64 points to settle at 66.21.
The quick rebound confirmed the bullish sentiment investors were having at the moment in spite of the long holiday. Of note is overall trading contracted only 9%. Liquidity on the southern bourse was 32% lower but strong interest in penny stocks gave the northern exchange a 40% improvement in turnover.
Viet Capital Securities Company said the gap between the group of around 25 counters mostly blue-chips plus some speculative issues and the rest had widened since the beginning of the year but is now starting to close.
This was best exemplified by the HNX-Index, which had risen by 5.2% since the beginning of the week versus a 2.4% gain of the VN-Index. The move was driven by steady gains in brokers and some real estate stocks that had broken above recent trading ranges.
HCMC Securities Corp. (HSC) believes the rally is likely to extend in post-Tet trading with local investors likely to step up buying while net foreign investors’ buying may be continuing. A possible cut in interest rates and recent signs of a cyclical turnaround in the economy have bolstered the market bulls.
“We also expect approval of the asset management company and foreign ownership limit rules to come out soon after the Lunar New Year. Meanwhile, 2012 corporate results have looked fairly positive on the whole although so far what we have seen are unaudited numbers. Even banks who have announced very aggressive provisioning have still been able to post some profit,” it said.
“Of course, once the laggard stocks are deemed as having caught up with the leading group, the big question is whether or not we will see another wave of buying in the leaders to push the index well above 500 points on the VN-Index at this stage. Our technical analyst tells us that there is serious resistance around 520 points or so and we think the market might need to consolidate below that level for some time. Even so the bias remains to the upside for the time being.”
In medium term, the market may run into some headwind with the FSAP (Financial Sector Assessment Program) results from the IMF-World Bank due at the end of the second quarter and the next National Assembly session due in May with some interesting items on the agenda.
HSC said it is clear that both business and investor confidence is beginning to return, which is the most important factor in any macro-economic recovery.
The Saigon Times Daily