Uptrend Expected to Continue after Tet

In the last trading session before Tet, the VN-Index ended its nine-day winning streak as the gauge lost 0.43 point, or 0.12%, to close at 373 points, just below the resistance line of 375 points. Meanwhile, the HNX-Index closed up 0.03 point, or 0.05%, to 58.44.

“Nevertheless, the rally so far was quite impressive as the VN-Index gained 12.25% since the low set on January 9, which, as we understand, came rather unexpected for most market participants,” Viet Capital Securities said in its report. The HNX-Index gained 6.9% during the same period and was lagging versus the southern bourse. Heavyweights like MSN and BVH were contributing a lot to the VN-Index’s rise.

“We expect the Vietnamese market to trade higher after Tet as investors in general might chase the rally. We keep all our open positions for now as we forecast a move to 425 points for the VN-Index and 65 points for the HNX-Index in the first quarter of this year,” the broker said.

HCMC Securities Co. (HSC), meanwhile, said that the last session before Tet was an unexciting day, although the previous weeks had at least reminded investors that perhaps there was a small faint light at the end of the tunnel.

“The year of the Cat inflicted a 27% loss for the VN-Index and a 45% loss for the HNX-Index and most participants will be happy that we leave the year behind us,” it added.

The Vietnamese equity markets have experienced an Asian crisis ‘in slow motion’ over the past years with prices losing between 85% and 90% for the median stock and this has devastated investor psychology. Given difficulties it might see, these are the times when one has to reconsider this asset class, HSC said.

“In the meantime, it seems that the coming year is going to be another challenge as the consolidation in the banking sector will force banks to prioritize their balance sheet instead of credit growth and as a consequence, liquidity is likely to remain tight. And with a market that is highly dependent on liquidity and leverage, it is unlikely that we will see a sustainable rally in the short term although we might see a few trading rallies in the first half,” the broker added.