Hanoi (VNA) – Although the stock market has been propped up by positive signs from both domestic and foreign markets, analysts still stayed prudent while giving forecast for the market trend in the second quarter of this year.
According to statistics from the Ho Chi Minh Stock Exchange (HoSE), foreign investors were net buyers in the first quarter of the year. They sold 44.55 trillion VND (1.9 billion USD) while selling 40.87 trillion VND worth of stocks in the period.
VN-Index on the southern bourse made breakthroughs by beating the psychological resistance mark of 1,000 points in mid-March, while there was a time the index rose 10 percent against the end of 2018.
In April, market adjustments made the VN-Index to pull around 990 points.
Stock brokerage director at KIS Vietnam Securities Corporation Pham Tuyen said that in the beginning of Quarter 2, the stock market would its growth momentum from the first quarter, and oil and gas securities were said to fuel the market surge.
“However, mid-April would be a ‘sensitive’ time as investors are waiting for financial statement audits of the listed firms to see their business performance,” Tuyen said.
According to Tuyen, notable policies such as the revised Securities Law, which is expected to be submitted to the National Assembly in the upcoming sitting, will have positive impacts on the market development.
The US Federal Reserve (FED)’s decision not to raise interest rates or rising oil prices are described as favourable conditions to stabilise investors’ psychology as well as maintain foreign capital inflow in the Vietnamese market.
Foreigners sold 44.55 trillion VND (1.9 billion USD) while selling 40.87 trillion VND worth of stocks in the period. (Photo: VietnamPlus)
Furthermore, the Government is making efforts to promote the securities market from a frontier market to an emerging market in 2020 with multitudes of measures to improve market transparency, develop new products and accelerate the equitisation and divestment in state-owned enterprise progress.
In its annual country classification review published late September last year, the UK-based financial and business information firm FTSE Russell (FTSE) said Vietnam is “currently classified as a Frontier market and is being added to the watch list for possible reclassification as Secondary Emerging market.”
Therefore, according to Viet Dragon Securities Corporation (VDSC), Vietnam’s market may be upgraded to the emerging market status by FTSE in 2020 as it requires at least one year for FTSE to seek advice from the international investment community and another year for investment firms to prepare for the changes and portfolio restructuring.
Following the upgrade, a wave of passive capital (investment that tracks a market-weighted index or portfolio) of 300 million USD will be poured in to the Vietnamese market, VDSC forecast.
VDSC also said that the new amended securities law, was also expected to help bolster the review process for the Vietnamese market.
However, VDSC was more cautious about making forecast for securities market development for the second quarter.
Experts from the firm said in a report: “In the end of April, investors will react to shareholders’ meeting as well as business performance in Q 1 of the listed firms. They may be more prudent while pouring money into the stock market for fear of various elements, including the State Bank of Vietnam continuing to control money supply as well as the risks of increasing inflation rate in Q 2”.
Meanwhile, economist Nguyen Tri Hieu stated the securities market has made humble contributions to the economy in the past ten years, and banking system is playing an important role in satisfying capital demand in the market.
Although transactions on the secondary stock market have been fuller of beans than ever before, Hieu said the money flows only pass on the hands of the investors.
“In fact, the amount of capital running from the primary market to issuers and the production and business facilities is not huge”, he added.
Actually, the commercial banks are struggling to mobilise short-term capital to serve huge demands for money for long-term investment activities, which causes liquidity problems for the whole financial system. Therefore, Hieu said the Government should outline specific measures to boost the development of the stock market./.
