Stock market to see strong fluctuations before entering bullish phase: experts

Vietnam's stock market is still in a downtrend, and it will continue to see strong fluctuations before embarking on a new uptrend, say experts.

VN-Index, which tracks the performance of the Ho Chi Minh Stock Exchange (HoSE), experienced a shaking week as it continuously fluctuated in a wide range. Particularly on Friday, the index made a strong gain of 23.75 points thanks to positive performance of the banking, securities and steel stocks.

Ending the trading week from November 21-25, VN-Index increased by 2.1 points or 0.2% to 971.46. However, the trading value on the HoSE decreased by 12.5% from the previous week to VND51,360 billion ($2.07 billion), corresponding to a drop of 16% in trading volume to 3,208 million shares.

On the Hanoi bourse, HNX-Index jumped by 5.9 points or 3.1% to 196.77, with trading value plunging 14.9% from the previous week to VND3,944 billion ($159.22 million), equivalent to a decrease of 21.2% in trading volume to 342 million shares.

BID of BIDV bank, VNM of Vinamilk, GVR of Vietnam Rubber Group, and CTG of Vietinbank had the most positive impact on the VN-Index. BID alone contributed more than 5 points to this index, followed by VNM with nearly 3 points. On the other side, GAS of PV Gas, NVL of Novoland Group and VCB of Vietcombank had the most negative impact.

Oil and gas tickers gained the most with a 9.4% expansion in market capitalization with PLX of Petrolimix jumping 12.6%, PVD of PetroVietnam Drilling & Well Services Corporation 4.2%, BSR of Binh Son Refinery 6.8%, and OIL of PetroVietnam Oil Corporation 7.1%.

The construction group also recovered well with HBC of Hoa Binh Construction Corporation increasing 2.7%, DPG of Dat Phuong Group 20.1%, CTR of Viettel Construction JSC 10.8%, SJG of Song Da Corp 12.2%, and HUT of Tasco JSC 14.7%.

Foreign investors were net buyers for the third consecutive week to the tune of VND1,768.7 billion ($71.37 million) on the two bourses. FUEVFVND was net bought most with 12.2 million fund certificates. It was followed by HPG of steel maker Hoa Phat and POW of PetroVietnam Power Corporation with 11.7 million shares and 9.6 million shares, respectively. On the other side, NVL was net sold most with 8.7 million shares.

The units involving proprietary trading recorded three out of five sessions of net buying with a total value exceeding VND300 billion, mainly purchasing NVL and VNM.

Hoang Cong Tuan, an expert of MB Securities (MBS), recommended that investors hold a long-term vision, focusing on core businesses with good performance and cheap valuations, especially those paying cash dividends.

"If investors remain pessimistic, they will most likely lose the opportunity to regain what they have lost," Tuan said.

With the movements during the past week, SHS analysts said the VN-Index's recovery and fluctuations in a narrow range showed a positive signal that the market is becoming gradually stable and is likely to break the long-term downtrend toward a more positive accumulation phase.

“Since the market is still in a downtrend, it will continue to see strong fluctuations, with deep drops and strong rebounds, before entering a new bullish phase," they forecast.

Therefore, investors should not buy a large proportion of shares during this period and avoid chasing upticks in sentiment in gaining sessions. They should choose stocks of companies with good fundamentals and growth potential, and those expected to recover strongly than the general market.

As the VN-Index may recover to the territory of 1,000 -1,020 points, VCBS advised investors to limit buying stocks which have already increased strongly and keep a reasonable proportion of shares, about 30% of the account, for better risk management in case selling pressure suddenly appears.