Stock market yet to enter dangerous territory: broker

The 1,300 point mark is a strong market barrier, but investors do not need to worry too much because the market has yet to enter dangerous territory, said Truong Hien Phuong, a senior director at KIS Vietnam Securities JSC.

The VN-Index closed Wednesday at 1,272.64 points, a decrease of 0.71%. Notably, foreign investors recorded their fourth consecutive net selling session, selling more than VND1,600 billion ($62.9 million), the highest in nearly three weeks. How do you evaluate the trading session on Wednesday?

I don't think it was a particularly special session. Although the index decreased, this is just a normal development when there is not much specific good or bad information.

The only thing investors need to note is that the net selling momentum of foreign investors was up to more than VND1,600 billion ($62.9 million). Proprietary traders and domestic institutional investors groups excluding proprietary trading also sold strongly, with VND300 billion ($11.8 million).

The net selling of these three groups was not because the market was bad, but may be due to portfolio restructuring. For foreign investors, the sellers included exchange traded funds (ETFs), which sometimes offload their holdings to take money home. While foreign closed-end funds focus more on restructuring their portfolios, they may also sell stocks that have increased sharply to take profits.

In general, the selling force of the group is the main reason the index has not been able to surpass the 1,300 point mark. This is still a strong barrier for the market. But I think investors do not need to worry too much because the market has yet to enter dangerous territory.

Many stocks increased well, even hitting their ceiling prices. Is the cash flow withdrawing from stocks with strong increases and large capitalizations to invest in other stocks?

Sell-offs have been strong, but cash has not left the market. Investors are simply looking for other areas of potential. These include stocks with recovery stories, positive stories from their own sectors, or positive business fundamentals.

In the context of the stock market being in an information vacuum, these are attractive factors. I think this will continue in the coming sessions. Smart money clearly knows how to find stocks with potential.

In your opinion, which industry groups have the potential to increase in the near future?

I think stocks in public investment and construction which have not made significant gains recently. The steel industry also has potential. These are two related industry groups.

Civil real estate stocks also have better prospects as they have already declined deeply, mainly due to the impact of speculative cash flow. I think investors should also look at codes that have cleared their bond debts, those in a healthy financial situation, and large land funds. Although the real estate market is slow, positive signs in corporate financial statements show that these businesses have good foundations.

Another group includes stocks with positive stories, such as the possibility of a stock market status upgrade. I think the KRX trading system will start operating on September 2 to coincide with a national holiday, as the long vacation will be an ideal time for data conversion.

Besides, there is the story of increasing capital among securities companies to serve margin lending, investment banking operations, and proprietary trading. Increasing capital and strengthening corporate finances is a good foundation for securities companies. Securities companies themselves also have many predictions about the potential of the stock market.

Finally, oil-gas and industrial real estate stocks. These groups have increased, but investors can still buy-in during correction sessions.