Market analysts expect unstable trade this week
The Vietnamese market will face unexpected movements due to the COVID-19 pandemic and the net selling pressure from foreign investors, market analysts said.
On the Ho Chi Minh Stock Exchange, the VN-Index recorded the strongest weekly drop ever last week as it plunged by over 130 points, equivalent to a decrease of 14 per cent.
The index lost 0.97 per cent to end Friday at 761.78 points.
An average of 323.9 million shares was traded on the southern bourse during each session last week, worth VND5.5 trillion (US$236.9 million).
Foreign investors net sold more than VND2 trillion on both exchanges last week. They net sold more than VND1.93 trillion on the HOSE and over VND71 billion on the HNX.
“Stock sectors have widely become oversold on a large scale, reinforcing the possibility of a short-term recovery. However, even in a rebounding scenario, the index will possibly experience wild volatility and revisit support 710-740 points,” said Tran Xuan Bach, a stock analyst at Bao Viet Securities Co.
“Besides, the maturity of March 2020 futures contracts and ETFs’ portfolio review session will take place during the second half of next week. Therefore, the market may suffer strong fluctuations in the last sessions of the week,” he added.
According to Chau Thien Truc Quynh, an analyst at Viet Capital Securities, the recent sharp falls will prompt investors to bottom fish, which may help the market recover.
“We propose two scenarios for the VN-Index next week. In the first scenario, the VN-Index will recover rapidly in the next one to two sessions to around 810 points and then shrink again. In a more positive scenario, the index will have a stable start at the beginning of this week before recovering stronger towards the end of the week to around 860 points,” Quynh told tinnhanhchungkhoan.vn.
Worst performers last week included Vietcombank (VCB), Bank for Investment and Development (BID), Vingroup (VIC), PetroVietnam Gas JSC (GAS), Vinhomes (VHM), Viet Nam National Petroleum Stocks (PLX) and Sabeco (SAB).
Most sectors suffered overselling on a large scale.
The banking group traded poorly with the most prominent stocks in the industry such as Bank for Investment and Development (BID), Vietcombank (VCB), Techcombank (TCB), VPBank (VPB) losing over 15 per cent in market value last week.
Fears of the COVID-19 pandemic also left a trail of red across the food-beverage group. Large-caps in the industry such as Sabeco (SAB), Masan Group (MSN) and Vinamilk (VNM) all dropped sharply when selling pressure appeared.
Oil prices continued to plummet after US President Donald Trump imposed restrictions on travel from Europe to the US in an effort to stem the COVID-19 pandemic. This negatively impacted petroleum stocks. The blue-chips in the industry such as PetroVietnam Gas JSC (GAS), PetroVietnam Technical Services Corporation (PVS), PetroVietnam Drilling Well Services Corporation (PVD), PetroVietnam Coating Corporation (PVB) and PetroVietnam Construction Corporation (PVC) all witnessed downward momentum.
“Businesses will be facing much more difficulties this year, especially those owing large debts. Even businesses in highly secure areas, such as education, are in a tight spot,” Nguyen Hong Khanh, director of market analysis department at Vietnam International Securities Co (VIS).
“According to my observation, the COVID-19 pandemic will become more complicated as many countries are in a booming situation. In South Korea, the pandemic has reached its peak and gradually declined in the past two weeks and this scenario may occur in the US and Europe in the next 10 days,” Khanh said.
“In the most optimistic scenario, at the beginning of this week, the market will recover but just in a few days. It is likely that there will still be strong shaking sessions in the next few weeks. Investors can take advantage of strong drops to accumulate targeted stocks,” he said.
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