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Feb 07, 2023 / 17:26

Investors cautious in stock market in Year of the Cat

The local stock market will not go smoothly in 2023 as risks still persist and hamper its prospects.

View-only may be a suitable term to describe the local stock market in the eyes of Vietnamese investors at the moment.

An investor watches Vietnamese stocks being traded at Bao Viet Securities JSC. Photo: The Hanoi Times

The local stock market tumbled on its latest trading day on February 7, losing 2.15% to close at 1,065.84 points.

Vietnam's benchmark VN-Index has swung forth and back in the range of 1,000-1,100 points since early December 2022.

Notably, the benchmark posted a seven-day rally from January 11 to January 17, 2023, right before the Tet (Lunar New Year).

After the week-long break, the VN-Index reached its two-month high of 1,117 points on January 27. Since then, the index has fallen a total of 4.6%.

Market trading liquidity has remained average. Trading volume has stayed in the range of 400 million-700 million shares daily, and trading value has ranged between VND10 trillion-VND11 trillion.

Recent stock market fluctuations suggest that investors stay on the sidelines and observe before making any moves.

Even broker-dealers such as SSI and Viet Capital are not very optimistic that the stock market will come to fruition in 2023. Their reports forecast that the VN-Index could end 2023 at 1,100-1,300 points.

"The opportunities we had in 2020 and 2021 would hardly come up again in the next few years so I would be quite cautious this year," Nguyen Quang Linh, a young investor with eight years of experience in the market, told The Hanoi Times.

Linh, like other retail investors, saw the return on his invested capital fall sharply in 2022.

"The positive performances of the stock market in 2020 and 2021 made me think that the uptrend would continue in 2022, so I made some strong buy-ins early in the year," Linh said.

Unexpectedly, the market was in turmoil amid the arrests and investigations against government officials, enterprise executives, and the Ukraine-Russia conflict.

Such events surprised investors, not only those in Vietnam but also across all continents. Risky assets like stocks witnessed substantial declines, and investors moved to "safe havens".

"My portfolio dropped some 20% last year," Linh said. "I made mistakes, but luckily I was able to recoup some losses and retreat to safety."

"It is now a bear market, and stocks are not worth purchasing," he added. "I would watch the market closely this year."

With four years of experience, Le Thi Van Anh said the market would not go easy in 2023.

"There is still a depression on the market in the Year of the Cat," the 26-year-old female investor said.

Anh agreed with the reports of securities companies, which point out several factors that may weigh on the market this year.

"There will be new arrests and investigations against a variety of officials and executives, who had committed irregularities in previous years," she said, indicating that will be the key factor influencing market sentiment.

Other domestic factors include the settlement of corporate bonds, the stability of the real estate market, and monetary and fiscal policies of the Government, Anh said.

She is also concerned about the ongoing conflict between Russia and Ukraine, the global economic recession, further moves by the US central bank, the Federal Reserve, and disease developments.

But she hoped that the reopening of China's borders would help the global economy and Vietnam in particular to recover.

"The chance is still there, but it is not for everyone. The market may go down deeper before rebounding," he said.

Linh and Anh suggested that investors balance the ratio of cash and assets in the portfolio to minimize risks and make small purchases to prepare for market recovery.

Nguyen Bich Ngoc, an investor with 15 years of experience, said that each investor should be well-prepared by learning about the market performance and operation of listed companies.

"Most importantly, don't use financial leverages like margin lending, avoid making decisions based on the advice from other people," she said.