Market declines offer investors opportunities to buy good stocks

Investors have been recommended to take advantage of the current correction of the Vietnamese stock market to increase the proportion of stocks for medium- and long-term positions in their portfolio.

The market experienced falls during the last trading week of February 6-10, with shrinking trading value, showing cautious investor sentiment.

After its gain in the week-opening session, the benchmark VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), plunged more than 23 points in the following session on strong selling pressures and the "absence" of cash flows, especially from foreign investors. The index recovered slightly and then dropped again in the last two sessions of the week, with low liquidity.

Closing the trading week, the VN-Index went down 21.85 points, or 2%, to 1,055.3, while the HNX-Index on the Hanoi bourse (HNX) fell 6.78 points, or 3.15%, to 208.5.

The trading value on the HoSE decreased by 26.3% compared to the previous five trading weeks to VND49,133 billion ($2.08 billion), corresponding to a trading volume decline of 29% to nearly 2.59 billion shares. The respective figures on the HNX were 38.4% to VND4,260 billion, and 39.7% to 282 million shares.

VHM of Vinhomes, VIC of Vingroup, MWG of Mobile World Investment Corp, and MSN of Masan Group had the most negative influence on the VN-Index. On the other side, the main supports for the market were VCB of Vietcombank, GAS of PV Gas, and PLX of Petrolimex. VCB alone contributed more than 3 points to the main index.

Stocks of retail and real estate industries were hardest hit with respective reductions of 6.98% and 3.95%.

Foreign investors were net buyers on both exchanges in the past week to the tune of VND908 billion ($38.5 million). STB of Sacombank was net bought most with 29.9 million shares, followed by HPG of steel giant Hoa Phat and HCM of Ho Chi Minh City Securities with 9.5 million and 3.3 million shares, respectively. On the other side, DXG was net sold most with 5 million shares.

Meanwhile, units engaging in proprietary trading net sold VND280 billion ($11.87 million), mainly GMD of Gemadept and VPB of VPBank.

According to Do Hoang Quan, analysis director at VPS Securities, in the context of shrinking liquidity, short-term investors need to observe further market movements, while medium- and long-term ones can pour money into industry-leading stocks.

Saigon-Hanoi Securities analysts said that the VN-Index is about to reach the support level of 1,050 points and is in danger of returning to the mid-term downtrend. According to technical analysis, the market is still in a retracement wave after exiting the downtrend and the correction after a strong recovery period is normal.

The group noted that after the current correction, the market is expected to continue to recover and find its balance for medium-term accumulation. In the short term, the positive movement of some leading stocks, especially those in the banking sector, pins a hope that the VN-Index will not return to the downtrend and move towards the strong resistance territory of 1,150 points.

"Investors should pay attention to strong stocks that tend to accumulate, recover soon and continue to maintain their uptrend as well as those of leading firms that maintain profit growth and have bright growth outlook this year. They can take advantage of the current correction of the market to increase disbursement," they said.

Meanwhile, Vietcombank Securities recommended that investors maintain a small proportion of stocks in industries that tend to be stronger than the general market such as oil and gas, electricity and water; sell tickers falling below their support levels; and limit early bottom-fishing.