Caution may continue dampening market

Main events this week include the US-China talks in Washington on April 3 and the release of US economic data on Monday (local time).

A recessional warning last week sent global stocks and Vietnamese shares down sharply while the US Federal Reserve pulled back expected rate hikes in 2019 amid signs of a global economic slowdown.

Worries about a global recession sent both global and local stocks down sharply early last week. The benchmark VN-Index lost 1.89 per cent (18.64 points) on Monday to break its short-term bottom of 980 points.

“Though it managed to re-claim the 980-point level in the following days, that remained a difficult milestone for the benchmark index as investors were clearly cautious,” Sai Gon-Ha Noi Securities (SHS) said in a report.

The benchmark VN-Index on the Ho Chi Minh Stock Exchange (HoSE) shed total 0.80 per cent on a weekly basis to end last week at 980.76 points.

On the northern Ha Noi Stock Exchange (HNX), the HNX-Index finished last week at 107.44 points, losing total 0.60 per cent from the previous one.

Caution is predicted to continue driving the market marginally this week as investors are running out of supportive information.

“The declining liquidity proves investors are standing on the side-lines to observe the market and they are unwilling to come back in when the market prospect is unclear,” SHS said.

Average trading volume on HoSE reached nearly 136.8 million shares in each session, down 24 per cent week on week. The figure for HNX was 29.4 million shares, down 28.3 per cent weekly.

Another proof of a caution-based market trade is the discount between VN30-underlying futures contracts and the large-cap VN30-Index, which tracks the performance of the 30 largest stocks by market capitalisation on HoSE.

The four VN30-based futures contracts, which will mature in April, May, June and September, are discounted by at least 16 points from the current level of the blue-chip VN30-Index.

“Investors are betting on the chance of the market’s further decline at the moment,” SHS added.

The momentum for further recovery remains weak as pillar stocks have been unable to extend their growth rates, BIDV Securities Corp (BSC) wrote in its weekly report.

Among blue chips that declined last week, property developer Vingroup (VIC) lost total 2.3 per cent, Vincom Retail (VRE) was down 1.1 per cent, while residential real estate firm Vinhomes (VHM) gained only 0.4 per cent and steel producer Hoa Phat (HPG) edged up 0.8 per cent.

Capital flow is divided into some specific sectors, which have positive news from annual shareholder meetings and 2019 earnings forecasts, BSC added.

“A part of the capital flows in small-cap stocks but the rate of return for those stocks is high” and that proves their gains would “reach the breakeven points when they organise their annual shareholder meetings,” the firm said.

According to SHS, the cash flow is quite weak at the moment, therefore, the market trend is unclear and it needs some trading days to settle down. The VN-Index is forecast to move between 965 and 995 points this week.