Even though the market benchmark plunged in July, experts see it as short-term move and the stock market is still an important capital mobilisation channel in the long-run.
As the new trading system from FPT Corporation has been put into operation on the Ho Chi Minh Stock Exchange (HoSE) in early July to solve overloading, many analysts expect the liquidity and the VN-Index will rise.
But the market’s moves told another story. Since the new system was applied, the market has entered a downward trend, while liquidity has kept falling.
The liquidity was much lower than the first six-month average due to rising COVID-19 infections, Le Quang Minh, Head of Research at Mirae Asset Securities Viet Nam, said at a webinar launched by Bao Dau tu on opportunities in the stock market in the second half of 2021.
“On the macroeconomic front, the fourth wave of the pandemic has affected many sectors in the economy, influencing the market indices,” Minh added.
“The outbreak has changed investors’ expectations since the second quarter of 2021, affecting sentiment and disbursement decisions.”
However, Mirae Asset forecasts that many businesses and industries such as technology and logistics will continue to maintain positive growth in the third quarter of 2021.
Therefore, the fall in market liquidity is only temporary and will soon recover in the near future. Other markets in the region also recorded a 10 - 15 per cent decrease during the peak of the COVID-19 outbreak.
If the pandemic is controlled in big cities next month, the cash flow will soon return, since individuals’ savings are significant.
And in the long term, the stock market still has many opportunities for development, continuing to affirm its role as an important capital mobilisation channel of the economy.
Nguyen Thi Phuong Lam, head of Analysis and Investment Consulting at Viet Dragon Securities Corporation, said that economic growth is unlikely to achieve a positive result as most sectors are suffering from the pandemic, but vaccination can save the market.
“Nevertheless, the speed of vaccination will greatly influence investors’ sentiment. If we accelerate the vaccine roll-out in big cities, the stock market will recover soon,” Lam said.
Meanwhile, another expert was more cautious about the ongoing outbreak of COVID-19.
“I am a little concerned over the control of COVID-19,” Nguyen Son, chairman of the Board of Directors of Viet Nam Securities Depository (VSD), said at the webinar.
“It may take the whole third quarter to contain the pandemic, or even the rest of the year at the current vaccination rate,” he added.
He expected that the country’s GDP growth might fall to 5.1 per cent, which can affect investors' sentiment.
Risks remain
At the moment, there are many good quality reference reports from securities firms analysing and assessing the market’s risks, reality and expectations for investors.
However with the rising number of individual investors recently, it is necessary for investors to learn more about the market, instead of just following the trend, said Nguyen Thi Viet Ha, a member of the Board of Directors of HoSE.
Investors also need to watch for market corrections to reduce losses.
On Thursday, the market benchmark VN-Index on HoSE was at 1,293.6 points, marking a fourth-day gain. But the index still lost nearly 9 per cent compared to the beginning of July.
During the session, nearly VND16.3 trillion (US$712.1 million) was poured into the southern market, equivalent to a trading volume of over 491 million shares.
This liquidity recorded the lowest level in nearly six months since the beginning of February in Wednesday's trade. — VNS