Market likely to enter recovery wave: experts

Monday, May 30, 2022 06:22

Traders watch the market's movements on their computers. — Photo

The stock market recovered for the second week in a row, showing that the recent rallies are quite strong and reliable. Improved trading volume with rising momentum is also a positive support signal, reinforcing the uptrend.

However, with the VN-Index approaching the psychological resistance level of 1,300 points and after gaining for two consecutive weeks, the market is likely to face a correction. If any, it is not necessarily negative but will create an opportunity for the market to accumulate before having more positive moves, said experts from Saigon - Hanoi Securities JSC (SHS).

The market fell earlier last week, but rebounded in the following four sessions, helping the VN-Index to close near the highest level since May 11.

On the Ho Chi Minh Stock Exchange (HoSE), the benchmark VN-Index ended last week at 1,285.45 points, up 1.33 per cent, while the HNX-Index on the northern bourse - the Ha Noi Stock Exchange (HNX) - dropped by 0.68 per cent to finish the last trading session at 311.17 points.

For the week, the VN-Index climbed 3.6 per cent and the HNX-Index rose 1.35 per cent.

Trading value on HOSE increased by 7.7 per cent from the previous week to nearly VND73.2 trillion (US$3.1 billion), equal to a gain of 5.6 per cent in the trading volume to 2.89 billion shares.

The trading value on the HNX also edged up 3.8 per cent over the previous week to over VND8.8 trillion, equivalent to the trading volume of 405 million shares, up 2.8 per cent.

Meanwhile, foreign investors were net sellers on both main exchanges with a value of about VND348 billion, with a volume of 10.55 million shares. Of which, Hoa Phat Group (HPG) was sold the most with 9.5 million shares. It was followed by VNDirect Securities Corporation (VND) with 9.5 million shares and SSI Securities Corporation (SSI) with 8.8 million shares. On the contrary, they net bought the most of Dragon Capital Vietfund Management (FUEVFVND), with 16 million fund certificates.

From the technical analysis point of view of SHS, the market’s recovery trend is receiving support, with the VN-Index bouncing off the psychological resistance level of 1,200 points last week to confirm the end of the correcting wave and entering a recovery wave with the nearest theoretical target of around 1,300 points.

However, if the market weakens again and the benchmark can not hold the threshold of 1,200 points, the market will once again return to the correcting wave, but this possibility is not high, the securities firm added.

On the other hand, although it has recovered strongly, the market valuation is still quite attractive for long-term investors with the price per earning ratio (P/E) of the VN-Index and the 30 biggest stocks tracker VN30-Index of around 14x, lower than the 5-year average.

With the recovery of the economy after the pandemic and business results of listed companies also showing impressive growth in the first quarter, the current stock price level is an opportunity for many long-term investments. However, investors can wait for a correction to disburse their capital, SHS recommended.

According to Mirae Asset Securities Viet Nam, the recovery helped the index get out of the medium- and long-term downtrend, which has changed from down to sideways amid the short-term is more positive. The current remarkable resistance level of the VN-Index is 1,300-1,315 points, while the support level is 1,250 points.

Meanwhile, MB Securities JSC (MBS) said that the market marked a second weekly gain after a long losing streak of six consecutive weeks has strengthened the ability to create bottom-fishing activities in the short term and has stimulated the return of cash flows to pursue bargain-hunting. — VNS

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