The stock market is meagre as investors remain prudent and leaving cash flows are heavily weighing on the investor sentiment. According to Saigon Hanoi Securities Joint Stock Company (SHS), the downtrend will stubbornly persist with the Hanoi Stock Exchange (HNX) while a medium-term upturn is also out of sight on the Ho Chi Minh City Stock Exchange (HOSE).
Mr Le Trung Dung, Senior Manager of Research and Analysis Department, SHS, said: In the coming time, the attractiveness of high interest rates will be undermining cash flows for the equity market. The differences between deposit growth and credit growth will force banks to mobilise capital to ensure liquidity.
Although share prices are assessed attractive by investors, the high deposit rate of 18 percent per annum and the advantage of cash position in the bearish market are impeding cash flowing into the market. Besides, as macroeconomic data are prone to high risks, investors now tend to stay on the sideline to have more accurate assessments on policy impacts.
According to the State Bank of Vietnam (SBV), total outstanding deposits at credit institutions are estimated to decrease: Vietnamese dong-denominated deposits increased 0.14 percent and foreign currency-denominated deposits rose 0.02 percent. Compared to the end of 2010, aggregate outstanding deposits were projected to climb 0.46 percent and credits for the economy are forecast to grow 5.01 percent. Thus, with the tightening of monetary policy, credit growth has slowed down significantly.
Mr Le Trung Dung said a majority of stocks on HOSE and HNX retreated considerably in the past three months. Thus, there was no surprise to see a rebound in the first short week of May (May 4 - 6) but this development was short-lived. In the second week of May, index-anchoring blue chips like MSN and VNM failed to support the market to rally, the VN-Index and the HNX-Index dipped at the back of weak demand.
"I persist in my opinion that the market is now suitable for long-term investments. Short-term (day-trading) investors should wait for the improvement of macroeconomic data, with the current top concerns being inflation and interest rates,” said Dung.
There are hosts of supports to Dung’s viewpoints. Losers usually outnumber gainers by far. Last week gainers like PVG, STP and STL lost ground. Lacklustre market, low liquidity and short-time midday rally reflect the prudence and hesitance of investors toward the market trend. The weak recovery at strong supporting lines and waning liquidity shows weak market momentums.
Dung recommended investors to pick up shares with a long time of accommodation or shares starting the uptrend to avert risks.
Luong Tuan
Vietnamese
