Investors suspicious of uptrend forecast

The benchmark VN-Index confirmed a steady uptrend with a forth consecutive rally week, but suspicion lingers in the context of modest liquidity and dominant role of large-cap stocks.- Photo ndh.vn

Easing investor worries about a possible correction after a long rally, the VN-Index hit a new 10-year high at 806.32 points on Thursday, the highest level since February 15, 2008. It decreased slightly on Friday on exchange-traded funds (ETFs) trading but still closed the week up 0.6 per cent at 805.82 points.

On the Ha Noi Stock Exchange, the HNX-Index also increased 0.54 per cent for the week, closing Friday at 104.49 points.

The market started the week in the negative zone under rising profit-taking pressure but quickly regained in the following sessions thanks to growth of heavyweight stocks.

Major stocks such as Masan Group (MSN), Vietcombank (VCB), Petrolimex (PLX), PV Gas (GAS), VinGroup (VIC), Hoa Phat Group (HPG), Bao Viet Holdings (BVH), Vinamilk (VNM) and Saigon Beer-Alcohol-Beverage (SAB) took turns to lead the market.

However, liquidity declined and remained modest, even when two FTSE and V.N.M ETFs conducted their portfolio trading on Friday. This indicates cautious psychology among investors.

An average of about 187.4 million shares worth over VND4 trillion (US$177.8) were traded in the two markets per session, down 30 per cent in volume and 13 per cent in value compared to the previous week.

“Although the market had a week of rallying, the divergence remained wide along with weakening cash flows and low liquidity,” said Tran Duc Anh, a stock analyst at Bao Viet Securities Co.

In fact, the recent uptrend has been strongly supported by positive movement of large-cap stocks. If the market liquidity makes no improvement, the market will likely enter a short-term downtrend, Anh wrote in a note.

The VN-Index has been on a steady upswing, with growth of 5.8 per cent in the last four weeks and over 21 per cent since the beginning of this year.

According to analysts on the financial website vietstock.vn, the VN-Index is heading for a new level of 815 points. Growth of stock in financial services, natural resources, real estate and construction and food-beverage sectors are exptected to continue to prop up the market.

Though the macro-economic condition is backing a market uptrend, analysts at BIDV Securities Co (BSC) have warned of negative impact of foreign trading on the local market.

“Though in doubt, the VN-Index will likely continue heading to new highs next week with rotation of large-cap growth. However, the market risk will also increase at the same time if it cannot attract domestic investors and foreign investors continue their net selling activity,” BSC’s analysts wrote in a report.

Foreign traders concluded the second week of net selling with a value of VND333 billion last week, lifting the two-week net sell value to VND407 billion in the two markets.

Vietcombank (VCB) topped the most sold last week with a value of over VND214 billion, followed by VinGroup (VIC) and Vinamilk (VNM) with over VND100 billion each.