The Vietnamese stock market is forecast to recover with improved liquidity in the third quarter thanks to the stable macro-economy and positive development of the world socio-economic situation.

The benchmark VN-Index on the Ho Chi Minh Stock Exchange climbed 0.72 per cent to close at 949.94 points, totalling a weekly decline of 0.97 per cent.

On the Ha Noi Stock Exchange, the HNX-Index was up 0.53 per cent to end at 103.51 points. The index decreased by 1.28 per cent last week.

According to vietstock.vn, nearly 215 million shares were traded on the two bourses on average in each session of the last week, worth VND4.5 trillion (US$192 million).

Vo Van Cuong, Director of Investment Consulting at Everest Securities Joint Stock Company (EVS) told news website tinnhanhchungkhoan.vn that the good signs of external movements would soon appear, supporting the local market.

The US and China would agree on another truce after the meeting between US president Donald Trump and his Chinese counterpart Xi Jinping during the G20 summit in Japan last week, with the American leader saying the outcome was “better than expected”, and China saying the US had agreed not to impose any further tariffs on its goods.

Investors’ confidence also returned after the US Fed kept interest rates stable and announced it would eye further rate cuts this year to boost the economy.

Positive factors at home and abroad, together with the stable growth of the economy would help the stock market increase in the third quarter this year, Cuong said.

According to Cuong, foreign cash flow continued to flow into Viet Nam's stock market. The potential of covered warrants, newly introduced to market players, will create a positive sentiment for the market. In the third quarter of 2019, the market will shift its concern to new products such as the issuance of covered warrants. This product is expected to stimulate both domestic and foreign money inflows, at least in the early period of its launch.

In addition, the Viet Nam-EU Trade Agreement (EVFTA) will have a positive effect on the Vietnamese economy, thereby positively affecting the stock market through a group of beneficiary shares such as textiles, fisheries, timber and seaport exports. The EVFTA, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as well as US-China trade conflicts can help Vietnamese goods access new markets.

According to Duong Van Chung, Director of the North branch at MB Securities (MBS), MBS forecasts a positive view on the stock market in the long term, at least from now to 2020, likely to go through two periods.

The first one is the accumulation period, preparing for a strong uptrend. This period can last about two to three months, during which the market may experience ups and downs with low or moderate liquidity.

The VN-Index may range from 938 to 1,000 points. This stage can create a very uncomfortable feeling for both buyers and sellers because the market does not show clear and definitive signs of movement, making it very difficult for investors to make investment decisions.

The second period would be the acceleration stage, after the market has created a solid foundation.

This period is expected to last from mid-September onwards, during which the VN-Index may successfully break the level of 1,020 points. When passing this milestone, the market will attract speculative cash flow and this is also the period all information about the Fed’s intention and trade war will be clearer.

Cash flow always tends to seek opportunities in stocks with outstanding performances. According to Everest Securities Joint Stock Company (EVS), banking and consumer stocks will continue to attract cash flow, while mid-cap stocks and the group benefiting from the trade war are expected to create a surge in the second half and end of 2019.

According to MB Securities (MBS), oil and gas stocks have been falling for a long time after hitting a 4-year peak. Currently, these stocks are at attractive prices. Oil and gas companies are also making profits and expect better business results from the third quarter onwards.

Technology and retail stocks are also forecast to have very good performance in the third quarter and will continue to grow further, so they will be steadily increasing and keeping a good pace for the market. — VNS