Market Likely to See Short-Term Rally This Week, Brokers

Both markets moved flat during last week but then shot up last Friday given the long awaited deal by European leaders to put euro-zone debt crisis under control. The optimism from the agreement improved investors’ sentiments in North American markets and those in Europe as well. Market excitement and rising demand propelled trading activity on the both exchanges.

Closing the week, the VN-Index gained 11.04 points, or 2.69%, from the previous week to close at 422.07. Liquidity slightly improved as there was an average 26.4 million shares worth VND469 billion traded daily.

HCMC Securities Corp. (HSC) said the downside risk on the local market seems to have declined dramatically. That does not automatically mean that equity prices will move upwards from here. However, it does mean that bad news is likely to have less of a negative impact over the coming months and that perhaps the time has come for investors to pay more attention to possible rallies again.

“That psychological process will likely take some time as a majority of investors is still in ‘bear-market mode’. A break of the highs reached in August could change that sentiment and could open the door for a different general view of the market,” it said.

“With little downside risk and reasonable valuations in many stocks, we continue to recommend to long-term investors to accumulate on weakness, while short-term players could certainly give it a try at this moment,” the broker added.

APEC Securities Co., meanwhile, said good business results of listed firms are a necessary factor for the market to maintain cash flow in medium and long term. “Up to now, we have yet to see positive profits brought about by macro factors. Enterprises posting good results are on those in some special sectors such as rubber, consumer goods and pharmaceutical,” APEC commented.

The Hanoi market gained a slight ground given three falling and two rising sessions last week, with the HNX-Index inching up 0.81 point, or 1.17%, against the previous week to close at 69.94. The market’s liquidity was slightly higher with the average daily volume of 28.9 million shares worth VND286 billion, falling by 4.1% and 7.9% from the week earlier respectively. The market is expected to move up again this week.