Jan 21, 2021 / 09:45

Vn-Index predicted to return to 1.200 after historic slump

The Hanoitimes - The return of foreign investors, large amount of money from new investors, and low interest-rate environment are factors that continue to keep up the Vn-Index, said an expert from SSI Securities Corporation.

A positive macro-economic environment and strong flow of capital into the stock market could help turn the benchmark Vn-Index around and back to the 1,200-zone.

 Vn-Index lost over 60 points yesterday to 1,131, down 5.11% agains the previous trading session. Photo: Hoang Trieu. 

Lan Anh, a broker expert at SSI Securities Corporation, told Hanoitimes following the market’s historic slump yesterday when the index lost 60.94 points to settle at 1,131, down 5.11% against the previous trading session.

“A strong rebound could happen right in the first quarter in case of positive business results in 2020 of public firms that are due to be released within this time frame and other supportive information,” noted Mrs. Lan Anh.

In mid-term, the SSI expert expects the market to surpass its previous peak in March 2018 at 1,204.3, referring to “the return of foreign investors, large amount of money from new investors [known as investor F0] at 80-fold increase against that of 2007, and low interest-rate environment.”

Back to the slump that came as a shock to the market yesterday, Mrs. Lan Anh noted the stock market was under huge pressure for correction following its surge in the past two and a half months.

“A correction phase is necessary for the market to become stable and shrug of a large margin lending amount estimated at VND80-100 trillion (US$3.47-4.3 billion),” she added.

Mrs. Lan Anh also pointed to the inexperience of F0 investors as a cause for the free-fall yesterday. “New investors coming in are unable to differentiate between good and bad stocks, so they tend to buy cheap ones.”

“When the market shows signal of going down, it could easily trigger a wave of sell-off from F0s who lack market knowledge, resulting in their huge losses,” added Mrs. Lan Anh. 

Echoing’s Mrs. Lan Anh, Phuong Le from Bao Viet Securities Company (BVSC) believed that the stock market will continually face selling pressure in coming sessions, albeit at slower pace.

“However, this pressure may last for 1-2 sessions and expectantly ease soon. Historically, plunges like today usually led to rebounding sessions (after T+3),” Ms. Phuong Le asserted, calling for investors to not sell at any prices in coming one or two sessions.

Ms. Phuong Le added the stock market would continue as an attractive investment channel as the low interest rates could last until the end of the third quarter in 2021.

According to Ms. Phuong Le, the vaccination of Covid-19 and increasing public investment would support the economy in medium and long-term.

“With expectation that decrees and guidelines for revised Securities Law, the Law on Investment and the Law on Enterprises will soon be issued together with a modernized trading system on the Ho Chi Minh Stock Exchange (HOSE) by the second half of 2021, we expect that FTSE will reclassify Vietnamese stock market as secondary emerging market in 2022,” stated Ms. Phuong Le.

“This, according to our historical observation, will bring about over US$1.3 billion to the Vietnamese stock market with cashflow from active funds in the second half of 2021,” she added.

Nevertheless, with both prices of good and bad stocks dropped sharply, experts suggested this is an opportunity for investors to come in.

Mrs. Lan Anh from SSI recommended investors to look for stock of enterprises with positive business performance, or seeking advice from professional consultants to have better understandings of the market.

Such view point was shared by broker Bao Nguyen from Viet Dragon Securities Company (VDSC), advising investors to “pick stocks with good fundamentals to accumulate at a reasonable price.”