It’s expected to be a strong September on the local stock market, as investors are maintaining confidence after positive economic data in August and a period of prolonged net buying by foreign traders. — Photo cafef.vn

It’s expected to be a strong September on the local stock market, as investors are maintaining confidence after positive economic data in August and a period of prolonged net buying by foreign traders.

The VN-Index on the HCM Stock Exchange increased 2.2 per cent last week, with gains in four out of total five sessions. The benchmark index has expanded 18.6 per cent since the beginning of this year, hitting 788.73 points on Friday.

On the Ha Noi Stock Exchange, the HNX-Index picked up 1.14 per cent last week, closing Friday at 103.81 points. The northern market index has climbed 29.6 per cent compared to December 30 last year.

According to Hoang Thach Lan, head of the Personal Banking Division at Viet Dragon Securities Company, the market will likely maintain its upward trend in September, backed by faster credit expansion in the last four months of this year.

The central bank is considering extending the time to implement a new policy regulating the maximum ratio of short-term funds used for medium- and long-term loans by credit institutions and foreign branches. This move is expected to ease pressure on the banks that currently have a high ratio, enabling them to increase lending. This is expected to lift credit growth to 21 per cent by year-end, as per the Government’s direction.

Although the Government has stated that banks must focus on loaning credit to the production sector and limiting credit in non-production areas such as securities or real estate, Lan said that in reality, it will be difficult to restrain capital from being invested in the stock market.

“Whenever the credit is relaxed, the stock market will go up,” Lan told tinnhanhchungkhoan.vn.

In addition, socio-economic figures in August showed the upward trend with major indicators including inflation, import-export value, foreign direct investmet, industrial production, total retail sales of goods and services as well as newly-established enterprises all increasing.

Chairman of the Office of the Government Mai Tien Dung said at a regular press meeting in the middle of last week that the country’s GDP growth is likely to hit the target of 6.7 per cent by year-end.

“The economic and business figures are still positive, supporting the upward trend,” said Phan Dung Khanh, head of investment advisory at Maybank Kim Eng Securities Company.

The VN-Index is near its yearly peak of 792.98 points recorded on August 7 (also the nine-year highest level). If the market could surpass this peak and touch the 800-point landmark, the upward trend would continue with more sustainability, Khanh said.

However, he noted a sharp decline in liquidity in the weekend session and said if liquidity did not improve, a possibility of a reverse could happen.

Overall liquidity increased last week with an average of 267 million shares worth VND4.6 trillion (US$202.6 million) being traded per session, up 14.7 per cent in volume and 21 per cent in value compared to the previous session.

Such a sharp increase was partly driven by abnormal trading in FLC Group’s shares. A total of 226 million FLC shares were exchanged last week, compared to an average of 45.2 million shares traded each session.

Stamp of blue chips

According to Nguyen Huu Binh, head of analysis at Vietnam Investment Securities Company, the market’s upward trend has relied heavily on strong performance by large-cap stocks.

Last week, blue chips in the banking, energy, real estate and consumer good sectors alternately led the market. Real estate giants such as VinGroup and FLC Faros Construction Co rallied 11 per cent and 15.3 per cent, respectively. Big firms like Vinamilk, brewer Sabeco, lender BIDV and Vietinbank also saw weekly rises.

“However, if the market only depends on such large caps, it will be hard to uphold the growth,” Binh said, noting these large caps were under high profit-taking selling pressure after a rally.

This happened after a sharp increase in early August. The VN-Index declined steeply from the peak of 792 points on August 7 to 760 points on August 22, he said.

Foreign investors continued to show their confidence in the local market, ending August in a net buying position. They were responsible for value of VND2.64 trillion in August, lifting total net buy value since the beginning of this year to more than VND15 trillion.

The stock market opens again today after the Independence Holiday. – VNS