Transactions on the stock market are struggling to return to levels recorded at the end of last year as several uncertainties prod investors to tread with caution.
Trading on the Ho Chi Minh Stock Exchange (HoSE) plunged to a three-month low of VND9.77 trillion ($412 million) this week despite forecasts by several brokerages earlier this month that a boom is expected after the market settlement cycle is shortened by four hours and odd share trading resumed.
“We believe that investors will seek opportunities in correction sessions by buying the dip. VN-Index could soon recover,” analysts with Rong Viet Securities said.
But the Vietnam benchmark has continued to struggle. Trading on the HoSE exceeded VND20 trillion only once this month on September 7 when VN-Index plunged 34 points.
The average trading on HoSE was VND15.73 trillion in August, less than half of VND32.60 trillion in November last year.
One reason for the decline is the lack of investment opportunities on the market compared to last year and the first quarter this year, said Le Ngoc Nam, head of analysis and consultancy at brokerage Tan Viet.
After major arrests and punishments of stock market manipulations, there were few stocks that surged, while big companies in property, banking and industry posted weak profit forecasts due to economic challenges, he said.
All this has made it more difficult to identify a strong and profitable stock, and speculators’ chances of making quick earnings are reduced, he added.
Ha Tien Hoang, a customer consultant at Rong Viet Securities, said that pessimism on the market was a main factor for the decline.
The plunging sessions of recent months have made investors more watchful about using leverages. Margin loans have plunged by half from March, he noted.
Hoang said that the improvements in trading technicalities such as shortened cycle and odd share trading resumption have not been able to boost the market as the shadow of gloomy prospects look large.
Brokerage analysts have not expressed confidence about a surge in trading for the remaining months. Most of them forecast average trading at VND15-17 trillion.
“Trading remains low and investors are buying small and medium-sized stocks, which shows that large investments are not ready to return to the market,” Hoang said.
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