Stock market to remain quiet ahead of Tet holiday

The VN Index on the HCM Stock Exchange on January 20 rose 0.6 percent to finish last week at 686.26 points. Vietnam’s benchmark index had a weekly gain of 0.2 percent.

The HNX Index on the Hanoi Stock Exchange edged up 0.4 percent to close on January 20 at 83.24 points. The northern market index ended slightly lower than the previous week’s level of 83.34 points.

Trading liquidity fell from the previous week. An average of more than 120.8 million shares was exchanged in each session, worth 2.49 trillion VND (110.7 million USD). Daily trading volume dropped 4.9 percent week on week and daily trading value slid 1 percent.

The slight gain in VN Index and fall of HNX Index with low trading liquidity after a week was the result of low investor confidence as the Tet holiday nears, Sai Gon-Hanoi Securities Company (SHS) said in a note.

“In the next three trading sessions, which are also the last three days of this lunar year, investors will pull out of the market and the two indices will move sideways.”

Agreeing that the market will be quiet, Bao Viet Securities Company said local stocks were suffering the effect of the Tet holiday as “money tends to flow out so that investors indulge in year-end consumption,” while some of them are waiting for a “clearer shot” to make their investments.

Lower market trading during these days was also similar to what happened in the last two years near the Tet holiday. And inactive investors could not motivate the stock indices to increase, Phu Hung Securities Company said.

Facing the current market status, most securities firms are advising clients to hold on to their money and avoid unnecessary and insecure purchases.

Investors interested in “surfing” could take advantage of slightly-falling sessions this week to expand their portfolios and catch up on the earnings reports that listed companies are preparing to release, SHS said.

To expand the portfolios, margin lending provided by securities firms would be a useful tool for those investors, but “margin lending should not be overused….”

According to BIDV Securities Company, investors may find opportunities in a quiet market to buy stocks that are expected to provide positive earnings reports.

“However, investors should consider their opportunity cost as the Tet holiday is near and trading liquidity risk remains high.”

Listed companies that could post high earnings in 2016 include those operating in the steel and construction materials, insurance, construction and energy industries, according to Maritime Securities Inc (MSI).

Some of these stocks are: Phuoc Hoa Rubber JSC (PHR), Vietnam-Italy Steel JSC (VIS), PetroVietnam Drilling and Well Services Corp (PVD) and insurance-finance group Bao Viet Holdings (BVH).