Shares may move sideways on increased selloff and profit taking
Shares may move sideways on increased selloff and profit taking
Stock markets look set to move sideways this week with continuous foreign selloffs pressuring investor sentiment and recent broad rally may spur some profit taking. 
The benchmark VN-Index on the Ho Chi Minh Stock Exchange slipped 0.31 per cent to close Friday at 757.94 points.
The southern market index gained total 8 per cent last week.
An average of 303.4 million shares were traded on the southern exchange during each session last week, worth VND4.3 trillion (US$184.4 million).
“VN-Index is forecast to head toward resistance zone of 780-820 points next week,” said Tran Xuan Bach, a stock analyst at Bao Viet Securities Co.
“However, various stocks with impressive increases this week have approached important resistance. Therefore, the indexes may possibly face profit-taking and correction pressure in upcoming sessions,” he said.
“The market still faces difficulties from foreign investors’ net selling pressure,” he added.
According to the Ho Chi Minh Stock Exchange, foreign investors net sold approximately VND8 trillion in March.
“Foreign net selling pressure in Viet Nam is strongly influenced by the current capital withdrawal trend in emerging markets. Global investors fear that the long-lasting COVID-19 outbreak will send the world economy into recession,” said Le Anh Tung, Market & Macro Strategist at KB Securities Vietnam (KBSV).
“At present, local investors play a key role in stabilising the market among fluctuations. They are making use of the steep decline to increase buy-in,” said Bui Nguyen Khoa, BIDV Securities Corporation's head of Macro Economics and Markets Division.
"Market can also pin hopes on the possible new cash flow from the newly opened accounts in March,” Khoa said.
The Viet Nam Securities Depository (VSD) said that domestic investors rushed to open trading accounts in the context that Vietnamese stock market suffered severe losses due to the impact of the COVID-19 pandemic.
Domestic investors opened 31,949 new securities accounts in March 2020, the highest number in the past two years, VSD said.
In March, the VN-Index witnessed a record reduction of 24.9 per cent, only behind the fall of 34.34 per cent in August 2001. However, 2001 was an early stage of Vietnamese securities with a small market size as well as limited numbers of investors.
Therefore, it can be considered that March 2020 experienced a historic decline of Viet Nam stock market, VSD said.
The tumble in March has attracted many people who have never invested in securities to open trading accounts to bottom fish. This created a new cash flow to offset the strong selling force from foreign investors, VSD said.
According to VSD, in March, foreign investors opened only 191 accounts, the lowest number in the last three years.
“Q1 2020 business results and macroeconomics statistics expected to be published in April may also place negative impacts on market movements,” said Tran Xuan Bach, a stock analyst at Bao Viet Securities Co.
“Profits of listed companies in Q1 may be below expectation under the influence of the COVID-19 pandemic,” Bach said.
Investors can still be optimistic on recent government stimulus measures unleashed to mitigate economic blow from the pandemic, said Khieu Trong Huy, a stock analyst at Bao Viet Securities Co.
On April 8, the Government issued Decree 41 on extension of payment due dates for taxes and land rents.
“This is good news for businesses, households, and individuals amid the negative impacts of the COVID-19 pandemic on production and business,” Huy said.
“Companies, institutions, households, and individuals engaged in production and business in a number of industries listed in the Decree will have their tax, and land rent payment term extended.”
“This list includes production of leather and related products, processing of wood, bamboo, and wood products (excluding beds, wardrobes, tables, and chairs), manufacturing automobiles, and other motor vehicles, besides travel agents, and tourism business.”
“The list also covers warehousing transportation business, accommodation, and catering services, education, and training, health and social assistance activities and real estate business,” he said.
“Small and micro enterprises defined in Law on Small and Medium Enterprise Support are also included in the list.”
Those subjects will be granted the extension of payment due dates for value added tax (except for value added tax at import), corporate income tax, and land rents for five more months, he said.
