Stock Market: New Investment Waves to Take Shape

 

Currently, prices of many stocks have increased several times from the start of 2009. The steady rally of the stock market persuaded many investors to keep more shares to wait for higher values. Net buying of foreign investors in many straight weeks reflects their belief for the steadfast rally of the stock market and the recovery of the Vietnamese economy. Their confidence is strengthened by better-than-estimated earnings of listed companies. According to many specialists, the stock market is accumulating values for reach new peaks. Thus, investors should not sell out stocks when the market experiences corrections and should see the downturn as the chance to restructure portfolios. They are recommended to keep stocks of companies with good earnings results, good fundamentals and P/E (price/earnings) ratio below 13. An analyst at FPT Securities Joint Stock Company (FPTS) said the current market upward movement was different from the overheating wave in June when share prices advanced sharply in many days and VN-Index climbed 15-20 points in a rallying session. However, the VN-Index is now growing steadily, supported by growing cash inflows and good earnings. Not all shares moved in the same direction in a trading day as in June. Blue-chips are expected to accelerate in the coming time.

 

Unlike previously, investors are more selectively purchasing and selling shares. Many investors are eyeing blue-chips with enough value accumulation and beginning to sell hot stocks to take profits. An investor with Orient Securities trading floor in Can Tho City said the market is receiving a lot of supporting news, including low August inflation and consideration of secondary stimulus package. Presently, consumer price index in August in major cities eased. Signs of global economic recoveries, led by the US economy announced by the Federal Reserve, have significantly supported the Vietnamese market. The Vietnam Foreign Investment Agency under the Ministry of Planning and Investment said in the first eight months of 2009, foreign direct investment (FDI) capital in Vietnam exceeded US$10.45 billion and foreign investors disbursed US$6.5 billion into their projects. This proves the very high confidence of foreign investors in Vietnam's economic recovery. However, strong market-boosting news and investor sentiment mainly came from outside factors, especially the rebound of the US and global stock markets.

 

However, after five winning weeks in a row, the market indices reflect clear waves. According to VNDirect Securities Joint Stock Company, the surge in liquidity signals a new upcoming correction. At present, investors should focus on blue-chips as they are expected to make a rebound soon. The uptrend is being consolidated but the advance pace may be slowed down in the course of accelerating selling pressure. Bao Viet Securitises Company said VN-Index will likely pass the resistance of 533 points to continue with the new wave. However, short-term corrections are anticipated in a couple of days and the rising trend is believed to be the main direction. Thus, holding is an effective position at present.