Experts advise investor caution despite market enthusiasm

The stock market continued to slump on April 10, with the VN-Index plunging to 1,065 points. Banking, real estate, construction, and building materials were all down, forcing the market to lose support.

The overall trading value of the market was about VND 18 trillion, with HoSE accounting for nearly VND 15 trillion. Foreign investors sold a total of VND 310 billion on the HoSE, with notable sales of HPG, STB, and KDH. The market declined in the VN30 category, with 20 stocks falling, 5 remaining constant, and just 5 rising. It is worth noting that several of the top ten stocks that had an influence on the market index today fell, including VHM, VIC, VCB, BID, and HPG.

Mr. Phan Le Thanh Long assessed that the stock market had gained quite substantially in the previous two weeks. Particularly, market liquidity is substantially stronger than in the prior time. There were times when the trading volume for the entire day was just VND 7,000 - 9,000 billion, but it has recently climbed to VND 13,000 - 14,000 billion/day, even exceeding VND 18,000 billion, indicating the strong interest of investors in the market as interest rates start to fall.

As a result, money flow is starting to recover, while foreign investors are net selling, indicating that the stock market's support in recent weeks has mostly stemmed from the "excited" attitude of domestic individual investors.

Another significant fact is that, other from the State Bank's backing and trend of reducing interest rates, there has been no unfavorable news in the last two weeks. As a result, people foresee no adverse occurrences in the near future, which will assist to stabilize the mood and the market.

Mr. Long explained foreign investors' net selling by saying that when investors have a lengthy net purchase amount when the VN-Index is below 1,000 points, this is the moment for them to take short-term profits.

The expert also stated that the trend of reduced borrowing rates has not yet infiltrated into businesses and that it would take time. The term "responsibility" refers to the act of determining whether or not a person is responsible for his or her own actions.

Only a few businesses, such as the stock market, have an instant influence. Stock prices in this business are particularly hazardous, driven by macroeconomic issues, and more susceptible to market conditions. The sector is now supported by the market's restoration of liquidity, so money tends to flow into the group of stock and high-speculation real estate stocks.

"The industries that receive the greatest attention in the media are also the simplest to fund, thanks to the tales that are conveyed. Despite the fact that the same phenomena is reported from many angles... in my opinion, the market is only viable when the enterprises are actually good and sustainable. Investors must comprehend that a trading volume of 15,000 billion dong purchased by someone indicates that someone sold 15,000 billion dong, and which component is vital for market growth sustainability. Meanwhile, the primary trading volume indicates plainly investor mood. In reality, while the interest rate cut has not yet infiltrated the industry, it has had an immediate impact on market psychology. This is a natural pattern that represents the economy's and stock market's revival," analyzed Mr. Phan Le Thanh Long.

Ms. Hoang Viet Phuong, Director of Investment Analysis & Advisory Center, SSI Research, also stated that the previous quarter's GDP growth rate was 3.3%, which is quite low. This number is comparable to that of 2011, despite the fact that the manufacturing sector is presently weaker; or the import-export turnover has declined by two digits.

"However, with the quite decisive reduction in interest rates, what we are eagerly anticipating is that the possibility of businesses absorbing borrowing capital may improve in the next quarter." This will demonstrate whether the economy is prepared to overcome challenges or whether we must continue to wait for interest rates to fall in the future," Ms. Phuong stated.