The benchmark VN-Index confirmed a steady uptrend with a forth consecutive rally week, but suspicion lingers in the context of modest liquidity and dominant role of large-cap stocks.
Easing investor worries about a possible correction after a long rally, the VN-Index hit a new 10-year high at 806.32 points on September 14, the highest level since February 15, 2008. It decreased slightly on September 15 on exchange-traded funds (ETFs) trading but still closed the week up 0.6 percent at 805.82 points.
On the Hanoi Stock Exchange, the HNX-Index also increased 0.54 percent for the week, closing at 104.49 points on September 15.
The market started the week in the negative zone under rising profit-taking pressure but quickly regained in the following sessions thanks to growth of heavyweight stocks.
Major stocks such as Masan Group (MSN), Vietcombank (VCB), Petrolimex (PLX), PV Gas (GAS), VinGroup (VIC), Hoa Phat Group (HPG), Bao Viet Holdings (BVH), Vinamilk (VNM) and Saigon Beer-Alcohol-Beverage (SAB) took turns to lead the market.
However, liquidity declined and remained modest, even when two FTSE and V.N.M ETFs conducted their portfolio trading on Friday. This indicates cautious psychology among investors.
An average of about 187.4 million shares worth over 4 trillion VND (177.8 USD) were traded in the two markets per session, down 30 percent in volume and 13 percent in value compared to the previous week.
“Although the market had a week of rallying, the divergence remained wide along with weakening cash flows and low liquidity,” said Tran Duc Anh, a stock analyst at Bao Viet Securities Co.
In fact, the recent uptrend has been strongly supported by positive movement of large-cap stocks. If the market liquidity makes no improvement, the market will likely enter a short-term downtrend, Anh wrote in a note.
The VN-Index has been on a steady upswing, with growth of 5.8 percent in the last four weeks and over 21 percent since the beginning of this year.
According to analysts on the financial website vietstock.vn, the VN-Index is heading for a new level of 815 points. Growth of stock in financial services, natural resources, real estate and construction and food-beverage sectors are expected to continue to prop up the market.
Though the macro-economic condition is backing a market uptrend, analysts at BIDV Securities Co (BSC) have warned of negative impact of foreign trading on the local market.
“Though in doubt, the VN-Index will likely continue heading to new highs next week with rotation of large-cap growth. However, the market risk will also increase at the same time if it cannot attract domestic investors and foreign investors continue their net selling activity,” BSC’s analysts wrote in a report.
Foreign traders concluded the second week of net selling with a value of 333 billion VND last week, lifting the two-week net sell value to 407 billion VND in the two markets.
Vietcombank (VCB) topped the most sold last week with a value of over 214 billion VND, followed by VinGroup (VIC) and Vinamilk (VNM) with over 100 billion VND each.