The VN-Index’s recovery is likely to face difficulties in the first half of September due to the restructuring of exchange-traded funds (ETFs) in the third quarter, but will still likely surpass the 1,000-point milestone in the second half.

Each quarter, ETFs, comprising of four foreign ETFs and two domestic funds, restructure their portfolios by adding stocks that meet their requirements on capitalisation and liquidity, and removing those that do not to ensure profitability.

Vu Minh Duc, head of market analysis at Viet Capital Securities JSC, told online site tinnhanhchungkhoan.vn that the growing momentum of the market in July and August, despite negative news about the US-China trade war and foreign net selling pressures, had strengthened the confidence of investors in the market’s prospects, thereby promoting cash flow.

However, the VN-Index was approaching the resistance level at 1,000 points while witnessing the restructuring of ETFs in September when many large-cap stocks were likely to be struck off, squeezing cash flow, he said.

The VN-Index might decline by 2-3 per cent after hitting 1,000 points, but then bounce back in the second half of September and head to the 1,030-point level.

The VN-Index on the HCM Stock Exchange closed Friday down 0.85 per cent at 989.54 points. The southern benchmark index gained 0.25 per cent for the week.

On the Ha Noi Stock Exchange, the HNX-Index gave up 0.7 per cent to end Friday at 112.79 points, but it increased over 1 per cent against the previous week.

An average of more than 225.2 million shares worth VND4.9 trillion (US$212.3 million) were traded in each session last week, down 0.8 per cent in volume but with no change in value compared to the previous week.

“In the short-term, we should not be too optimistic about the return of foreign capital coming from indirect investment channels such as ETFs in the context of the attractiveness of the US dollar and the escalation of the US-China trade war,” Duc said.

However, with the intrinsic appeal of the Vietnamese economy coupled with the IPO roadmap, further enlargement of the foreign ownership and the Government’s determination to upgrade the stock market, I believe foreign capital flows will return to the market.

“In the last weeks of September, business results of listed companies in the third quarter will start to be released.

“I have high expectations of growth for stocks in the financial, consumer, industrial and real estate sectors,” Duc said.

Nguyen Ngoc Lan, head of the brokerage division at Agribank Securities Co, said in September the market would continue to be affected by many external factors like the world trade war and increased interest rates of the Fed.

On September 6, US President Donald Trump will announce his decision on a plan to impose tariffs on US$200 billion worth of Chinese imports. This information will impact the Asian market, including Viet Nam.

“In the first week of September, the market is unlikely to see positive movements. In general, I think the stock market may go up but with low liquidity in September,” Lan said. — VNS