Shares to rebound this week but risks remain

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A view of Gem Sky World urban area project developed by Đất Xanh Group (DXG). DXG fell 11.7 per cent last week. — Photo courtesy of Đất Xanh Group

HÀ NỘI – The Vietnamese market is forecast to enter a recovery phase this week after a strong correction last week but investors should remain cautious with the market’s risk factors and instability.

On the Hồ Chí Minh Stock Exchange (HoSE), the market benchmark VN-Index stayed flat to end Friday at 1,496.02 points.

The index had lost a total of 2.12 per cent last week.

An average of 1.1 billion shares were traded on the southern exchange during each session last week, worth VNĐ33.4 trillion (US$1.47 billion).

“VN-Index’s recovery stopped at the resistance area of 1,520 points and re-corrected. Compared to the earlier sessions, the liquidity decreased, showing that the cash flow is still cautious about the market’s instability recently, especially the weak cash flow in the group of stocks that dropped sharply,” said Việt Dragon Securities Co.

“With the signal to step back, the market recorded the first negative signal for the current recovery span. It is expected that VN-Index will test and re-explore the range of 1,480 – 1,490 points and the area around 1,520 points for the VN30-Index,” it said.

“Therefore, investors should temporarily be cautious about the market’s risk factors and instability and wait for more signals to re-evaluate the market’s status.

The market is likely to remain bullish thanks to the fundamentals of the macro-economy, Q4 business results and cash flow. The approval of the economic recovery support package will help the economy regain its growth momentum.

According to Standard Chartered, Việt Nam’s economy will recover rapidly in 2022, with GDP growing by 6.7 per cent. The bank also raised its forecast for Việt Nam’s 2023 growth to 7 per cent and maintained the medium-term growth outlook. The forecast was a part of the bank’s recently published global research and the in-depth macroeconomics report about Việt Nam.

The report mentioned that in recent years, income growth had outpaced consumption growth, which provided excess savings to counteract the pandemic’s impact. However, COVID-19 would remain a prevalent risk, at least in the short term, said Khiếu Trọng Huy, a stock analyst at Bảo Việt Securities Co.

The first quarter of 2022 should see factories resuming full operations and the rollout of the Government’s stimulus programme. Improvement in the global trade environment would support exports, although imports would likely remain high, he said.

Inflation might become more of a concern for Việt Nam in 2022. Supply-related concerns, such as price hikes due to the impact of the pandemic, would be the main short-term reason, he said.

According to Trần Xuân Bách, a stock analyst at Bảo Việt Securities Co, the market will be supported by the upcoming release of Q4 business results of 2021 from listed companies and the Government’s stimulus package.

Investors should restructure their portfolios towards attractively-priced stocks with good fundamentals and positive Q4 business results. Investors should prioritise options in the VnDiamond and VnFinlead baskets, he said.

Notable stocks that fell sharply last week were The Investment and Industrial Development Corporation (IDC) down 9.1 per cent, Sài Gòn Thương Tín Real Estate JSC (SCR) losing 9.8 per cent, Đất Xanh Group (DXG) falling 11.7 per cent, Nam Long Group (NLG) dropping 13.2 per cent, Dream House Investment Corporation (DRH) losing 14.5 per cent, Tân Tạo Investment and Industry (ITA) down 15 per cent, Development Investment Construction (DIG) down 17.5 per cent, Hoàng Quân Consulting Trading Service Real Estate Corporation (HQC) falling 17.7 per cent, LDG Investment (LDG) down 19.8 per cent, FLC Group (FLC) down 28.6 per cent.

Banking stocks had a positive trading week, with Bank for Investment and Development of Vietnam (BID) rising 12.9 per cent, Vietinbank (CTG) up 6.8 per cent, Vietcombank (VCB) increasing 4.5 per cent, Military Bank (MBB) up 3.7 per cent, Tiên Phong Bank (TPB) up 2.2 per cent and Saigon-Hanoi Bank (SHB) up 1.8 per cent.

In the context of a relatively strong sell-off, securities stocks were also significantly affected with many losers such as SSI Securities Inc (SSI) down 5.6 per cent, Hồ Chí Minh City Securities Corporation (HCM) down 7 per cent, MB Securities Corp’s (MBS) down 7.7 per cent, Saigon-Hanoi Securities (SHS) down 7.8 per cent, VNDirect (VND) down 10 per cent and Việt Capital (VCI) down 13.9 per cent. VNS

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