Market liquidity to stay low ahead of Tết

HÀ NỘI — Việt Nam’s stock market is set for unpredictable short-term movement, as both local indexes witnessed a choppy trading week last week, on low liquidity and weak cash flow.

The benchmark index on the Hồ Chí Minh Stock Exchange (HOSE) increased slightly by 0.05 per cent to close at 902.30 points on Friday.

The southern index totalled a weekly decline of 0.05 per cent.

The HNX Index on the Hà Nội Stock Exchange dropped 0.36 per cent to close at 101.56 points on Friday, totalling weekly losses of 0.3 per cent.

An average of 282 million shares was traded in each session last week, worth VNĐ3.5 trillion (US$150 million).

Last week’s average trading figures were up 70 per cent in volume and 6 per cent in value compared to the previous week.

Trần Đức Anh, director of Macroeconomics and Market Strategy, KB Securities Vietnam (KBSV), said in recent years, the market has witnessed similar conditions ahead of the Lunar New Year, with market indexes fluctuating and liquidity plummeting.

This can be considered a seasonal development as investors need time to evaluate the previous year’s business and make plans for the new trading year, Đức Anh told tinnhanhchungkhoan.vn.

The market being influenced by the external factors in recent times has also made many investors nervous and kept them outside the market observing the indices carefully. This has kept liquidity low as few transactions were made.

Cash in the market has focused on a few stock groups with stable, consistent and less risky performances.

"The market experienced a quite boring trading week with the total trading value on the three exchanges only at about VNĐ3 trillion per day, half as much as the average level,” said Nguyễn Hồng Khanh, head of Analysis Department, Vietnam International Securities Company (VIS).

“As the Tết (Vietnamese Lunar New Year) holiday approaches, many individual investors have withdrawn their cash, limiting transactions and temporarily standing outside the market and waiting until the holiday season ends,” Khanh said.

However, in terms of figures, it is clear that the market recorded a significant recovery with VN-Index staying above 900 points.

In the two weeks before Tết, many enterprises will announce fourth quarter business results, including the banking and textile industries. This will give investors optimism.

The slight net selling of foreign investors on the HOSE in the last session of the week was not a worrying signal and it didn’t mean the net buying trend since the beginning of the year has ended, said Trần Đức Anh from KBSV.

The net buying trend of foreign investors from the beginning of this year seems to be similar to the net buying trend in neighbouring emerging markets, Đức Anh said.

During the period, foreign investors net bought more than $40 million in the Vietnamese stock market. The corresponding figures for Indonesia, Philippines, Malaysia and Taiwan were $455 million, $132 million, $11.5 million and $299 million, respectively.

According to Đức Anh, there are many reasons for this. The US dollar has weakened in recent weeks, global risk factors are cooling and the emerging economies in the region have maintained growth momentum.

Statistics from the past show that whenever the dollar weakens, global capital inflows often shift to emerging markets, supporting these markets and helping them perform better than the markets of developed nations. — Khanh