Unusual securities in the “ghost month”

Trading Investors at KIS Securities Company – Taken by N.Hien.

Sudden spurt

In the first week of August 2016, the stock market had 4/5 dropped sessions. The VN Index sank below the support level of 640 points. The medium term rising channel was broken, and instead a downward trend was formed. Last week liquidity also remained low in a situation where the market lackedsupporting information due to the business results season and partly influenced by the psychological effect in the beginning of lunar July. Market breadth is always in a state of contraction as the number of reduced shares exceeded that of increased ones. The only bright spot of the market comes from stable net buying activities on both exchanges by foreign investors. In this context, investors believe the market is under the psychological impact of the "ghost month." Most investors were cautious in investing and business activities for fear of "bad luck". Thus, many argue that the market will remain sluggish until the end of August 2016.

However, when it comes to the 2nd week, both indices suddenly spurted, regaining all the lossesin the previous week. Specifically, the VN-Index was up 28.32 points, an increase of 4.51% compared with the previous week and closed at 655.71 points. Investors psychology was somewhat less pessimistic when trading sessions gained quite decisively, the index closed at a high level with an improvement in liquidity, and gained over 2,000 billionvnd/session. Accordingly, the factors that led to the recovery phase mainly come from blue-chipstocks. According to VCBS Securities, in the absence of active support information from the domestic as well as the international market, a strong recovery phase in the 2nd week of August 2016 has received the support of the money flowinginto the market through the easing measures of the State Bank since the beginning of the year. Liquidity of credit institutions continued, the interbank interest rates witnessed a slight downward trend, and a large amount of foreign currency was being purchased to increase foreign exchange reserve. Besides, the stable net purchase momentum of foreign investors, focusing on blue-chips is also a positive supporting signal for the market trend.

Bloomberg - an American financial and economic journal has also given an evaluation that the 2nd week of the August 2016 as the best week of the VN-Index in the past 13 months by dint of the recovery of oil prices and Vinamilk shares added to the MSCI Frontier Markets index. Accordingly, the increase of the VN-Index was the strongest in the Asia market and is the 5th in the portfolio of more than 100 global indices. As observed by investors, the market in annual August generally lacks supporting information. Whereas information on enterprises’ business results are already reflected in stock prices from June and July. However, in the past period, with a sharp rise in the US stock market, the growth of world oil prices has supported energy stocks group. Along with this, the Government continued new policies to support companies. In addition, Mr.Phan Dung Khanh, Director of Investment Consulting Maybank - Kim Eng Vietnam stock company - also said that the falling sessions in the first week of August 2016 created investors’ bottom-line, then makes a sudden spurt of the market in the past week.

Positive prospect

Anticipating the market trend in the remaining sessions of this August, Mr.Khanh said that the concern about the decline of the "ghost month" has been overcome. Therefore, the market will continue to increase, but not so high. "Due to the spiritual elements, if the market rises sharply, it will also make investors fear" - said Mr.Khanh. In the medium term from now until the end of 2016, Mr.Khanh also has positive comment as the market continues to be supported by stable economic conditions, inflation is under control, and the exchange rate remains steady... Some industries’ business results are also predicted to improve in the last months, supporting the market in the near future.

Speaking at a seminar on "Prospects for stock market in the second half of 2016," been held by KIS Securities Co. (Korea) on 15 August 2016, Mr. Yun Hang Jin, Head of Newly Emerging Markets at the KIS Company said that despite slight growth, compared to regional markets such as Indonesia and the Philippines, Vietnam’ growth is still very modest. The reason is that from the beginning of this year, foreign investors were not selling on the Vietnam stock market whilst maintained net buying on other markets in South East Asia. However, Mr. Yun said that in the next period of time, it is more likely that foreign investors will continue to pour capital into Vietnam. Accordingly, FDI inflows would increase with the optimistic outlook in long term of Vietnam economics and the fundamentals of emerging markets improve, the state of risk aversion would be reduced, the expectation on opening up capital market... are factors which will attract future investment.

According to Yun, recently, Vietnam's stock market has received the attention of many Korean investors, where attention focused on large capitalized stocks in the VN30 basket or having plans to open a room in the future. Currently, Korea is leading in scale of capital inflow into Vietnam, equivalent to the scale of other markets in the region combined. From the above factors, Mr. Yun said that in the last months of 2016, the market can be adjusted slightly before surging up again. The mainstream will remain within the range of 600-700 points.