Stock Market Expected to Rally again This Week

The markets closed mixed last Friday as investors were locking in some profits. On the southern bourse, the VN-Index retreated 0.46 point to 423.43. The VN30 index gained 1.37 points to 477.77 while the HNX-Index also remained in positive territory, adding 0.28 point to close at 67.06 with 95 limit-ups amongst 200 advancers.

Fiachra Mac Cana, managing director of HCMC Securities Corp., said the late pullback in the VN-Index should come as little surprise on a Friday after such a strong performance. The HNX-Index managed some gains and with volumes expanding dramatically on both exchanges, brokers had a good day business-wise at least.

“The market is still trying to push higher and we may see some more upside next week as many investors have only recently entered the market and we see plenty of signs of institutional cash still on the sidelines. Of course, profit taking pressure has also increased of late given that many early investors would be sitting on gains of up to 50% in some cases,” Mac Cana said.

Viet Capital Securities Co. (VCSC) said the government has demonstrated in the past few months that it can rein in inflation, anchor market expectations as well as strengthen the currency. Trade deficit figures out last Thursday and national CPI (consumer price index) numbers will continue to impress and underpin capital inflows into the country.

The VN-Index already jumped 22.6% in USD terms this year, while the FTSE Vietnam Index rallied by 28.9%. So basically, Vietnam beats all the benchmarks that it is measured against. This significant relative outperformance will most likely put Vietnam back on international investor’s radar, it said.

Market participants are obviously getting more nervous now as they are underinvested or the better case, invested and sitting in the market with decent returns achieved in a very short-term period. If the latter group is not excessively selling, there won’t be significant room for a correction as the ones that are underinvested will step in to buy corrections.

“So for now, we expect buying pressure will be higher than selling pressure, mid-term. We keep our view that this is a medium-term bull market due to still favorable short-term patterns within a medium-term positive technical environment,” VCSC said.