Any chance for securities market to recover before Tet?

Illustrative photo (Photo: VietnamPlus)

Hanoi (VNA) – The securities market ended its first trading week of 2019 at 880.9 points. 

Both domestic and foreign investors remained prudent as the whole market dipped into red margins on January 3 trading session, making the VN-Index benchmark on the Ho Chi Minh Stock Exchange to break lowest level of 880 points in three months amid a gloomy global market. After a fall of 1.35 percentage points, the market was propped up by a slight recovery on January 4.

Cumulative challenges

The Dow Jones Industrial Average lost its steam, falling by 2.8 percent to close the January 3 trading session at 22,688.22 points. The S&P 500 Index dropped by 2.47 percent to 2,447.89 points. The tech-heavy Nasdaq Composite Index fared just as badly, slipping by 3 percent to close the day at 6,463.5 points.

While in Europe, the FTSE 100 in London closed 0.6 percent lower at 6,692.66 points, and major indices in Paris and Frankfurt – CAC 40 and DAX 30 – slid 1.7 and 1.6 percent to 4,611.48 points and 10,416.66 points, respectively.  The EURO STOXX 50 Index, Europe’s leading blue-chip index for the Eurozone, followed the trend as it lost 1.3 percent to end up at 2,954.66 points.

Experts said that players tended to seek safe investment channels instead of high-risk products like securities. The investors’ display of a cautious psychology made the market liquidity to plunge, which doubled the challenge for the whole market. The January 3 trading session was described as turbulent, during which the total trading value was only 2.6 trillion VND (111.2 million USD).

Earlier, VN-Index ended 2018 at 892.54 points, down 9.31 percent from the same time last year.

Nguyen Dinh Thang, an analyst from Sai Gon-Hanoi Securities JSC pointed out that 2018 was the first year that the VN-Index experienced negative growth after six consecutive years of positive expansion.

GDP growth in 2018 surpassed all forecasts to reach 7.08 percent.(Photo: VietnamPlus)

 
Skipping domestic elements

According to Pham Tuyen, Director of KIS Vietnam Securities Corporation’s securities brokerage, the Vietnamese stock market was suffering substantially from the global financial market. Domestic investors had skipped positive domestic elements like the GDP growth of 7.08 percent in 2018, export value of 240 billion USD, all-time high trade surplus of 6.32 billion USD, and robust business results of the listed companies.

“Meanwhile, foreign players net bought stocks in seven consecutive sessions, bring total cumulative value to more than 1 trillion VND (43 million USD)”, Tuyen said.

It is true that the main indices in the market fell significantly; however, it did not mean that investors bartered away their shares in the first trading week of the year, analysed Thang.

He explained that matching orders in the recent three trading sessions were lower than the previous time, thus, it is possible that investors are saving their money, studying the market and waiting for more attractive stocks.

Both domestic and international analysts offer a prominent outlook for the Vietnamese macro-economy in 2019. However, the global market’s volatility may still affect investors’ confidence and as such continue to shake the market.

In fact, after the VN-Index fell from 960 to 860 points, many shares had their prices dwindle, Tuyen said, adding that several slid 20-50 percent, while some others had good sales. Therefore, it is possible for the market to recover and reach 900 points before Tet holiday.

“For the short term, as the index bounced back to 880 points this week, the market should be less negative. However, we should not expect an immediate recovery because it is too risky to invest heavily at this time”, Thang said.–VNA