Analysts expect slow trading week
Analysts expect slow trading week
Following waning liquidity throughout last week, investors exercised more caution in buying stocks, and analysts predicted that this week's trading will continue to be slow.
The slowdown is considered normal due to the upcoming Tet (Lunar New Year) holiday.
On the HCM Stock Exchange, the benchmark VN-Index lost 0.34 per cent during the course of the week, closing at 574.13 points last Friday.
Shares improved in the last three sessions, but liquidity saw sharp declines when the daily trading volume dropped by 26.2 per cent, as compared to the previous week, averaging more than 85 million shares worth VND1.4 trillion (US$65.4 million) per session.
Blue chips lost the most, as much as the VN30, which tracks the top 30 shares by market value. Also, liquidity fell by 1.79 per cent during the week, ending at 595.69 points.
Hit by Circular 36, which took effect early last week, bank stocks dropped to about the floor price in the first few sessions due to fears that the new ruling will reduce the cash flow in the stock market. However, it was these shares that climbed strongly towards the end of the week and supported the market uptrend.
Furthermore, oil and gas shares recovered when global oil prices extended rallies, surpassing the $50 per barrel mark. Big stocks in terms of market capitalisation, such as PV Gas (GAS) and PetroVietnam Drilling and Wells Service Corp (PVD), gained value, adding fuel to the market rally.
At present, there is no negative information on the market, but according to many analysts, weak liquidity is impeding a sustainable uptrend.
"Liquidity dropping by the day is not a positive signal, so it will be too early to conclude that the market has recovered from downward pressures. Also, the week before the Tet holiday often sees higher selling pressure as a segment of investors usually wants to collect money," analysts at BIDV Securities Co explained in a market report.
They also believe the index will fluctuate when the VN-Index reaches 575 to 580 points, and advise investors to be cautious while making decisions related to buying and selling.
On the Ha Noi Stock Exchange, the HNX-Index saw a more substantial decline of nearly 2 per cent during the week, finishing at 83.87 points last Friday.
Liquidity also saw a sharp decline here when the market volume dropped by almost 38 per cent, as compared to the previous week, reaching 36.5 million shares worth VND452 billion ($21 million) per day.
Moreover, foreign investors concluded the week as net sellers in both markets, responsible for a combined net sale value of VND92.2 billion ($4.3 million). However, their net selling trend showed signs of a stop as they turned to being net buyers in the HCM City's market in the last two sessions, with the buying value increasing.
According to a technical study by analysts from Vietstock, NetValForVN line showed an upward tendency, and their buying will likely be stable this week. This is expected to have a positive impact on the market and the psychology of domestic investors.
