The Vietnamese stock market is predicted to prosper from the third quarter of this year after downturns as regulators have tightened control to make it healthier, experts said.
The recent cases of corporate leaders arrested over market manipulation or violations of information disclosure has badly influenced investor sentiment, experts told a weekly finance talk show on Vietnam Television last week.
“Investors have withdrawn from the market, from blue-chips, midcaps, and penny stocks even though there were many groups of businesses having achieved breakthrough business results in the first quarter like fertilizers, seaports, chemicals, and technology,” said Le Duc Khanh, analysis director of VPS Securities Company.
The market has also seen investors follow trends instead of focusing on long-term investment or proper portfolio management.
Ho Quoc Tuan, senior lecturer at the University of Bristol, the U.K., said negative investor sentiment was seen in all markets. Another strong influencer is margin calls, under which investors rush to dispose some of the securities. "This process, combined with shrinking market liquidity, has made the market decline faster," he said.
However, both experts were of the view that recent re-corrections would bring investments back to the market later. Khanh added it is hard now to find an investment channel that could be more attractive than the stock market.
The pair believed the Vietnamese stock market would prosper from the third quarter this year, as post-pandemic economic recovery gains stronger momentum thanks to the peak tourism season, with profit margins expected to grow.
Tuan was of the view that businesses would secure good performance starting in the beginning or middle of the third quarter, and that corporate and individual investors would act during that time.
He added investors could become bullish towards the end of the year as the U.S. Federal Reserve raised its interest rates several months prior.
Both Tuan and Khanh recommended investments into the insurance industry as insurance companies would be offering encouraging and stable dividends. Other recommendations are the groups of electricity, water, and basic utilities; companies restructuring or undergoing merger and acquisition; and export firms.
In another suggestion, Saigon Securities Inc. Chairman Nguyen Duy Hung said 2022 would offer opportunities for those trading securities with their equity.
Addressing the company’s annual general meeting last Saturday, he said the 2022 opportunity for investors with non-borrowed cashflows, profitable for only a certain period, is much safer than "swinging to the top", which he said involves buying and waiting for prices to rise without any idea why they go up or down.
“While capital is no longer cheap, securities in 2022 still have a chance for non-borrowed cashflows,” he commented.
The Vietnamese stock market plunged deep on Monday, with VN-Index losing nearly 60 points to close at 1,269.62, its lowest level in nine months.
A margin call is a warning that you need to bring your margin account back into good standing, possibly by depositing cash or additional securities into your account, or selling securities to increase the ratio of assets you own entirely to the amount you borrowed.