Positive signals from liquidity

14-Feb-2020 Intellasia | Dau tu Chung khoan | 6:02 AM Print This Post

The liquidity increase on the HCM City Stock Exchange (HoSE) in January 2020 and even in the declining sessions after the Lunar New Year holiday (from January 30th) is one of the basis for investors to expect that the current stock price level will not return to a deep decline due to the impact of the Coronavirus outbreak.

The factor that helped the liquidity increase is the downturn of the stock index in the last two months of 2019, in which the process of many stocks accumulated at the low price level, especially banking stocks.

In addition, In January 2020, foreign investors retuned to be net buyers with a value of about 1.968 trillion dong, ending the net selling period in the last five months of 2019.

In January 2020, investors made investment with the expectation of an attractive cash dividend payment rate.

Before the Lunar New Year holiday, the market sentiment was optimisticwith forecast of a new wave after the holiday, when information on the 2020 business plans have gradually been released.

Forecasting can take place as usual without the outbreak of the Coronavirus which is affecting China’s economy and the global economic growth, including Vietnam.

In such unfortunate context, a “lucky point” for investors in Vietnam’s stock market is that the stock price level before the Lunar New Year only started to see signs of prosperity on a low price level basis and the use of financial leverage is not very high.

Therefore, right after the Lunar New Year, the market plummeted (on January 30th, 31st and February 3rd), but only the stocks of businesses which are considered to lack a basic foundation hut the floor.

Looking at the group of real estate stocks which are under negative impact, there is a differentiation found. Basic real estate stocks such as KDH, NLG, NTL, TCH recorded modest price decline, while the stocks such as DXG and LDG hit the floor prices in red-hot sessions.

For other groups of stocks, hot stocks like TNA, VRC sharply dropped, while banking stock prices only saw slight decline and then increased again, etc.

This development shows that investors have kept their accounts in a safe position against prudent forecast about difficulties of the industries such as real estate, seafood export, textile and garment, construction materials, etc.

Only banking stocks attracted cash flows, helping the market regain green in the following sessions. However, in the first session of the week (February 10th), banking stocks quickly corrected against the pressure of the Coronavirus outbreak on the economy.

The market liquidity on the HoSE in the first half of February reached an average of 191 million shares per session, following the positive liquidity achieved in January (189 million shares per session).

The movement of the stock market largely depends on the evolution of the Coronavirus developments in China, Vietnam, and other countries in the near future.

Nevertheless, looking at the more abundant liquidity since early 2020, we can expect that investors have accepted the current stock price level for their long-term goals.

Epidemic will surely affect the business results of businesses in the first quarter of the year, but can hardly make them struggle. Businesses with good foundations are the destination of cash flows.


Category: Stocks, Vietnam

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