Vietnam’s stock market needs a new cash flow, which should be large enough to draw a massive supply and break the bearish phase of the last few months.
Trading value continuously falls
The liquidity and volume decreased, trading value on both floors has been less than two trillion dong per session for nearly a month. That has led indices to continuously decline and investors become pessimistic. In the last several months, the HOSE’s trading value has seen gradual falls. Trading value of March was 45 trillion; of April was approximately 40 trillion dong; May, June, July’s trading value fell to 38, 30, 25 trillion dong, respectively. On August 27, it was less than 20 trillion dong. On HNX, from August 1 to 27, trading value reached just above 15 trillion dong, very low figure compared to the previous months.
Transactions of foreign section were also very modest. From June to August, total trading value of this section on HOSE was ranging from two to three trillion dong, while that of the previous months stood at about five to six trillion dong per month.
The capital flow on the stock market has declined sharply.
Representative of Kim Long Securities Co said the capital flows of the domestic section are now in investors’ pockets, but those investors have already lost their confidence in the market so they tried to escape and would not come back. Moreover, investors who tried to come back have given up as the market continuously hit a new low. The gloomy market has made the investors to be not so much interested in stocks; instead, they are depositing their money in banks, or buying gold or are investing in other sectors.
The market awaits new capital flows
General director of Artex Securities Corporation Phan Van Ha pointed out that domestic investors have large amount of capital available, but as they are pessimistic and losing trust in the market, investors would not disburse. The new source of capital that investors expect from the loosened monetary market would not come, and the hopes on the rapid disbursement from the foreign section are also not likely to become real. Ha said many investors believe that banks would pump more money into the market like last year, but it would not occur, and is very difficult to occur in the context of controlling inflation and limiting credit risks on securities loans as regulated by the State Bank. Ha added that when the foreign section is suffering great losses after continually purchasing in the previous months, and the disbursement became negligible at the current time, it is also very difficult to expect on this source of capital.
Where are the new cash flows?
According to director of Trang An Securities Company Le Ho Khoi, the main problem lies in the confidence of investors. Only when there is faith, investors would be willing to withdraw their savings, mortgage their houses, borrow money or raise money to invest in securities. This faith has been fading away due to various factors. The government determinedly declared lowering interest rate in February, but the current base rate remains at eight percent per annum and has not changed much. This is one factor given by Khoi.
Would the cash flows return?
An expert supposed that the money could flow back when VN Index dips below 400 points, and continuously rebounds to about 450 points. He said that the decreasing trend continues to happen, prices of many stocks fall in to the attractive range, thus pulling the investors as well as new sources of capital.
Nevertheless, when there is still shortage of support formation in the market, and macro economy is not really operating well, very few investors would be interested in securities. Sharing the same point, Ha also said the market really needs stable and sustainable sources of capital, not the temporary ones, but they only come when the economy is stable, firms are seeing good growths, effective and profitable business operations.