Market outlook still gloomy: brokers

Securities firms continued to forecast a gloomy outlook for the local market this week after the VN Index tumbled 5.07 percent in the first week of October with four rising and one falling session.
Apec Securities Co. said the index dropped further as the macro economy was still dismal and foreigners continued to offload large caps last week. Liquidity was dull during the week as cash flow seemed to run out of the equity market.

“The market technically will maintain its downturn in the short and medium term and only see sharp rebound once high liquidity resumes in the near future. We continue to advise investors to stay cautious to avoid risk,” the broker said.

HCM City Securities Corp. (HSC) also said that it is a very difficult environment for both long-term investors and short-term players alike for the moment. But long-term investors have an advantage in that prices remain depressed and even some key bluechips have seen their share prices drop back to the lowest levels since the August rally.

“Short-term players have to resort to the small to microcap segment, but the problem there is the lack of liquidity and thus the lack to maneuver. We are nevertheless seeing an outperformance of the mid to smaller cap segments of the markets as suggested by the small weekly gain in the HNX-Index,” it said.

The volatility on the currency front, the gold market and Friday’s announcement of a hike in one of the central bank’s official rates, coupled with uncertainty about third quarter’s corporate earnings are keeping a lid on equity prices for the moment. Furthermore, the market is abuzz with rumours loans turned sour, so it does not have the ideal climate for higher prices.

More clarity is needed on all these issues, but perhaps at this stage it is important to see whether the market reacts negatively over the coming weeks, said the broker.

“We remain optimistic for the medium to long term, but it can possibly be a frustrating period from here until the moment that prices start to move up,” HSC added.

The Hanoi market moved almost flat with two rising and three falling sessions last week, with the HNX-Index inching up 0.16 points, or 0.22 percent, against the previous week to close at 71.5. The market’s daily trading volume averaged out at 34 million shares worth 343.6 billion dong, shrinking 17.3 percent and 23.3 percent from the week earlier respectively. The market is predicted to drop slightly this week.

Saigon Time Daily

Tags: vietnam stock, Vietnam stock market, VNindex