Brokers skeptical about uptrend this week

Despite a strong rebound seen in the last two sessions, attractive prices after a prolonged downward spell, and observations that all macro-economic uncertainties have been factored in, brokers are still skeptical about asustained uptrend this week.

Several securities enterprises are afraid that after a 10-day losing streak came to an end last week, the upward movement would be short-lived as investors are still concerned about the capital flow.

Losing heavy grounds in the first three sessions, the VN-Index last week shed 5.1% from the previous week to close at 410.82. Liquidity strongly improved given huge selling pressure as the daily volume averaged out at 36.6 million shares worth VND665 billion, surging 42.3% and 29% against a week earlier respectively.

APEC Securities Co. noticed a strong unwinding pressure of a number of securities firms in losing sessions last week. There was a huge supply of large-caps like VNM, SJS, DPM and VIC while investors flocked to buy cheap stocks with good fundamentals in final sessions. Maybe, they had yet to believe that the market had bottomed out.

Cash flow on the equity market is still running into a bottleneck as commercial banks have been told to reduce the outstanding loans to non-production sectors to 22% prior to June 30 and to 16% by the end of the year. The market needs more positive signs, including good results of the Government’s inflation fighting scheme or brighter economic outlook, to make investors feel secured about better capital flow.

“However, given attractive prices, investors should consider to pick up stocks in falling sessions this week,” the broker advised.

Foreigners shifted to the selling side last week to the tune of VND221 billion, suggesting that they had turned cautious given the long losing streak and changed their view about the market’s recovery, according Vietnam International Securities Co. (VIS).

Fiachra Mac Cana, managing director of HCMC Securities Corp., said although the markets continued to rise for a second day last Friday, turnover fell quite sharply suggesting caution about the current market movement.

“With overall volumes far lower, a lack of participation by the Hanoi market and bids and offers moving in line all of this points to a rebound that fast running out of steam. Having said that, it is unlikely the market will return to the sharp declines of the previous ten days or so. More likely that we will resume the downtrend again from next week but at a much more gradual pace,” he predicted.

“While we are positive medium to long term we also think it is important not to chase up prices at this point,” Mac Cana added.

The Hanoi market lost 6.15 points, or 7.99%, against the previous week to close at 70.73 after three falling and two rising sessions. The daily trading volume averaged out at 71.5 million shares worth VND1.4 trillion, up 14.7% and 20% against the week earlier respectively. The market is expected to move sideways this week. – SGT

Tags: vietnam stock, Vietnam stock market, VNindex