Week ahead: Investors may look to strengthen cash-over-stock ratio

After having kept the market increasing for five consecutive weeks, investors may get some rest this week and raise the cash-over-asset ratios in their pockets.

Investors at SSI Securities office. Photo: tinnhanhchungkhoan

With such market outlook, this week is expected to be choppy for the Vietnamese stock market.

Vietnam’s benchmark VN-Index on the Ho Chi Minh Stock Exchange last week gained total 1.16% to climb to a 13-month high of 1,021.49 points.

The VN-Index has increased by total 11% in five straight weeks since October 29.

The market was hit in the first trading day of last week after new coronavirus infection cases had been reported in Ho Chi Minh City over the weekend.

But then strong domestic purchasing power helped lift the index up in four consecutive trading days with a total gain of 1.83%.

According to Mr. Dinh Quang Hinh, Director of market strategy and macroeconomics at VNDirect Securities Corp, investors did not panic over the new virus-infected cases.

Compared to the market sell-offs in late March and July – when new Covid-19 cases were reported – last week’s selling pressure was obviously lighter, he said.

The VN-Index increased by at least 0.54% each day between Tuesday and Thursday but the growth slowed down on Friday to 0.17%.

“Buyers are becoming cautious,” Saigon-Hanoi Securities Co (SHS) said in its weekly report. “Last week’s total growth and order-matching trading volume fell slightly from the previous week.”

“We can see investors are realizing their profits in the large-cap sector and moving into penny stocks,” Mr. Dao Tuan Trung, Market Analysis Director at Vietinbank Securities Co, said.

“Penny stocks made big gains in the last two trading days of the week and trading liquidity remained high in those days,” he said.

Trading value on HoSE hit the peak of VND14 trillion (US$606.7 million) last Wednesday and fell to average VND10.2 trillion (US$441.3 million) last Thursday and Friday.

Trading volume also dropped from more than 684.5 million shares on Wednesday to average 536 million shares in the last two days.

“Investors will continue selling large-cap stocks in the first few days next week after their strong rallies,” Mr. Trung said. “The market will consolidate and the VN-Index is expected to reach higher resistance levels such as 1,040 points."

SHS forecast the profit-taking will enhance this week and the VN-Index may return to 900-1,000 points.

To boost the market, investors must keep the cash flowing from a sector to one another, said KB Vietnam Securities Co’s market Strategy Director Le Anh Tung.

“But in my opinion, there is not much room for purchasing stocks at the moment as some leading large-caps are already overbought,” Mr. Tung said. “That will lead to some falling days with increased selling pressure. And a short correction is needed at the moment to make the market growth sustainable.”