Stock market to grow strongly after Tet thanks to positive signs

Hanoi (VNA) – The benchmark VN-Index on the Ho Chi Minh Stock Exchange fell by 1.98 points to end at 908.67 points on the last trading day of the lunar year.

However, experts have high hopes for a new breakthrough on the stock market thanks to positive signs from both domestic and foreign markets.

Foreign investors accumulate capital before long holiday

Before the lunar New Year holiday, the stock market had a fluctuating trading week with the VN-Index approaching 920 points at one time. However, demand weakened on the last days, leading to a decrease in the index.

Assessing developments in the market, Tran Hoang Son, Manager for Market Strategy of MB Securities Company (MBS), said that although the stock market had been fluctuating, the prices of leading stocks in banking, real estate, retail and technology maintained an upward trend.

In the past week, market liquidity was low and decreased slightly compared with that of the previous week, with money poured into low-cap stocks. The value of transactions averaged 1.94 trillion VND per session, compare to 2.2 trillion VND in the previous week.

However, movements of foreign investors were positive as they posted a total net buy value of nearly 400 billion VND (17.1 million USD) in the most recent 10 sessions, focusing on banking, electricity production and distribution, securities companies, real estate and chemicals. Meanwhile, foreign investors mainly sold stocks in oil and gas and construction materials.



Positive signs in both domestic and foreign markets

According to Nguyen Dinh Thang, an analyst at Saigon - Hanoi Securities JSC (SHS), the lunar year ending with a slight decrease of VN-Index and low liquidity was normal and predictable considering the psychology of individual investors who always want early Tet holidays.

Thang said the US Federal Reserve’s announcement to postpone increasing interest rates on January 30 has had positive impact on the US market, and will have a similar effect on the Vietnamese market, although the effect has yet to be seen clearly in the country.

MBS manager Son also had an optimistic view based on good news from inside and outside the country. He stressed that the US-China trade war is being gradually solved, the US dollar has shown signs of cooling down and the US stock market is going up with positive business reports of the business sector.

On the domestic market, foreign investors have spent much on banking stocks, Son stated, adding that many listed companies have released good business results for 2018.

Betting on stock market after Tet

Son said that in the week before Tet, exchange-traded funds (ETF) actively engaged in transactions bringing increasing selling pressure, which was the main factor for the fluctuation of the domestic market.

“Therefore, when ETF sales are absorbed, it will be a big bet on market prospects after Tet. Currently, the bottom of VN-Index is increasingly consolidated, and the selling pressure is not large. Therefore, there is a possibility that the VN-Index will fluctuate in a narrow band of 905 points - 915 points, and then break out from the post-Tet trading week,” Son said.

Sharing the same view, Thang said “after the nine-day Tet holidays, transactions will recover, and if no unexpected things happen, investors are often in a good mood in a new year. Therefore, the cash flow will come back to help the market develop”.

However, Thang had a more cautious view, advising investors to keep calm and keep a close watch on market developments as VN-Index is close to the important resistance level of 915-920 points.-VNA