Experts: Strong recovery unlikely this month

09-May-2018 Intellasia | The Saigon Times | 6:01 AM Print This Post

Having made a deep correction last month, the VN Index of the Hochiminh Stock Exchange is likely to move sideways or recover slightly in May as the market will see a lack of supporting information, said securities experts.

Speaking to the stock market news site, Vu Minh Duc, head of the individual client analysis department at Viet Capital Securities Company (VCSC), said the April market crash was predictable as the main index had shot up to new highs. Besides, foreign investors took profits to restructure their portfolios as they were seeking opportunities at newly listed firms such as Vinhomes, Techcombank and FPT Retail.

Meanwhile, Nguyen Kim Chi, director of KIS Vietnam Securities Company’s Pham Ngoc Thach branch, put the blame on the accelerating margin lending as many investors had taken out loans to buy shares during the strong stock rallies.

This month, the market will see a lack of supporting information as the annual general meetings and financial reports season in the first quarter will be over. The market is likely to drop or move flat with low turnover.

On the bright side, the market still maintains a positive outlook in the long term. Besides, stock prices have become attractive after the correction last month, he added.

According to a recent report of VCSC, though three rate hikes by the US Federal Reserve are expected in 2018, the dong has continued to strengthen, supported by strong foreign inflows from remittances, exports, foreign direct investments and indirect capital flows into equities and bonds.

The State Bank of Vietnam has taken advantage of the trend to boost its foreign reserves to around $63 billion, which was confirmed by the prime minister at the regular cabinet meeting last week.

The current foreign reserves are equivalent to 3.5 months of imports, surpassing the three-month import cover suggested by the International Monetary Fund. Growing foreign reserves should give the central bank greater leeway to defend the system against external shocks, if any, the report said.

Chi of KIS Vietnam, meanwhile, expected the market to perform better this month because long and medium-term investors have become active again after the deep decline. Furthermore, the macro situation is still giving support to the market.

Besides, foreign investors are expected to shift to the buying side as they are seen active at recent initial public offerings. Having finished portfolio restructuring, they will continue purchasing blue chips as prices are more affordable now.


Category: Stocks, Vietnam

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