October Stock Market and Expectations

 

Investors' hopes are not necessarily unfounded as the market performance is positive in October in the latest five years. Specifically, one October saw a significant growth, one October witnessed a drop, and three Octobers saw the market move sideways. Given the past performances, securities companies shared the view that both bourses in Vietnam may have surprising developments.

 

Tran Minh Hoang, Head of Economic Research and Market Strategy Department under the Vietcombank Securities Company (VCBS), said the market experienced an accumulating September and the key indices moved in a narrow range. But, the market may have major changes in October.

 

According to stock analysts, although the macro economy is general good, the stock market is still underperforming on lack of boosting news on macroeconomic data and performances of listed companies in couple with broad volatility on global markets. These reasons make investors shy of risk assets. This is shown quite clearly by the market liquidity in recent weeks.

 

However, Hoang said company information will affect the investor sentiment and the market performance at large. Many expect a turning point in the market trend.

 

In fact, the stock market almost had no supporting information during September while it was largely driven by global and regional market developments. Nguyen Hong Khanh, chief analyst at Sacombank Securities Company (SBS), said while the economic growth is optimistic, the stock market lacks a corresponding response. The VN-Index made a slight growth (from 545 points to 570 points). Interestingly, the range bound was quite large during the month.

 

In general, investors focus on corporate information during October as many companies release third-quarter earnings reports where they can base to make forecasts for full-year performances of listed firms. The VN-Index is hovering at 560 points - a not high or not low level in relation to market prospects; thus, the strong bounce is unlikely.

 

Experts do not rule out the possibility that the market will go down in a short term before rebounding back with a more robust force in the fourth quarter. Shares of real estate companies, retailers and banks are expected to be the hot picks in the near term though only a few companies in these sectors pull a strong exert on investors.

 

Khanh said investors will pay more attention to stocks with good fundamentals and strong financial capacities. Opportunities with penny stocks will not be as many as in previous years.

 

Remarking on prospectively potential sectors, Hoang said bank shares are unlikely to jump high on moderate business performances but they will still keep the market rhythm rather than set up the market trend. Oil and gas shares will depend largely on crude oil prices on the world market. Hence, the driving force of this sector may not be clear and appreciated. Real estate companies will likely catch the fancy of investors as the property keeps reviving and property companies have reported good business results. Many specialists share the view that this sector will be the key drive.

 

In 2015, Vietnam has seen optimistic GDP data and slowing inflation growth. Economic prospects are higher after Vietnam joins the Trans-Pacific Partnership (TPP), enacts Decree 60 on foreign ownership regulations and enforces the Investment Law in 2015. And, these events will largely affect the performance of Vietnamese stock market in the fourth quarter of 2015.