Stock market volatility expected amid coronavirus next week

Even in a rebounding scenario, the VN-Index on the Hochiminh Stock Exchange is expected to experience wild volatility and revisit a support range of 710-740 points next week, according to Bao Viet Securities.

The brokerage said in a daily report that market uncertainties would remain given the coronavirus pandemic and the net-selling pressure from foreign investors.

As of late Saturday, the Vietnamese Ministry of Health reported four more coronavirus infections in Hanoi City, the northern province of Quang Ninh and HCMC, bringing the country’s total to 53.

Bao Viet said the benchmark index successfully retested the support zone of 710-740 points on Friday. Stocks have become oversold on a large scale, reinforcing the possibility of a short-term recovery.

The firm added the maturity of March 2020 futures contracts and exchange-traded funds’ portfolio review session will take place during the second half of next week. Therefore, the market may suffer strong volatility in the last sessions of the week.

Stock exposure should be maintained at 10-20% of the portfolio. Investors with a high stock proportion may consider lowering their exposure during the rising sessions, said the firm.

It also advised that investors with a high cash proportion should refrain from chasing such rallies and only consider buying stocks within the support zone of 700-740 points with low proportions, prioritizing portfolio-existing positions.

Viet Capital Securities reported that mirroring other Asian markets that traded wildly following Wall Street’s biggest drop since 1987, the VN-Index plunged 6% in early trading on Friday before climbing back in the rest of the session to close down by roughly 1% at 761.78 points.

The index ended the week down 14.5%, the largest weekly decline since August 2017. In addition, foreign investors net sold around US$28 million worth of shares on the southern bourse, the 24th consecutive net-selling session, according to Viet Capital.

Lender BID (-4.6%), the biggest drag, finished the week down more than 25%. Another bank, VCB, fell 1%, becoming one of the day’s top decliners. Conversely, STB gained 4.5%, TCB 1.7%, CTG 0.7%, MBB 0.9% and HDB 0.9%.

Gas and oil firms GAS and PLX lost 4% and 5% on Friday, taking their weekly losses to 26.5% and 27.3%.

Financial service provider TCH continued to nosedive. 

Other notable decliners included insurer BVH (4.7%), mobile phone retailer MWG (2.8%), and dairy producer VNM (1.8%).

On the positive side, Vietnam’s largest private firm VIC and power firm POW were the top two gainers, up 0.8% and 6.1%. Investment firm NLG surged 6.8%, easing off its five-session losing streak.

On the Hanoi Stock Exchange, the HNX-Index lost 0.52% from a day earlier to end Friday at 101.38 points. More than 84 million shares worth around VND831 billion were transacted on the northern bourse that day.

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