Stock investors remain defensive

Stock investors are still in a protective stance in the short run

>> Seaport stocks fail to entice investors

Embracing prudence

Foreign investors repurchased more than 205 billion dong on March 7th, 2023, increasing the value of the VN-Index. The VN-Index rose by 10.6 points (1.04%) to 1,037.84 points by the session's end.

The primary drivers of activity in financial and securities sector equities were BID, MSN, VCB, HPG, and CTG. The equities of the steel industry, including NKG, HSG, VGS, HPG, SMC, and TLH, also had a large increase. Significantly, HSG climbed by 4.9% and NKG increased almost to the roof.

However, the excitement in the real estate stocks from the previous session could not be sustained. Decree 08/2023/ND-CP on corporate bonds did not prolong the positive momentum for this group, so stocks such as ITA, KDH, TCH, LDG, DXS, IJC, HTN, NVL, CRE, DXG, and DIG saw a drop in price.

Mr. Nguyen Tuan Anh, a securities analyst, claims that steel stocks are performing well and that the wave of declines appears to be over. From the bottom to the present, stocks in this industry have had a robust recovery. From now until the middle of the year, the commodity market will experience points that are different from those predicted in earlier forecasts. Let's start with the oil and gas story. The WTI index is probably producing a long-term bottom, signaling that supply and demand have reached a trading-friendly price level. The commodity index bottom suggests that the price will be difficult to drop further and has a high likelihood of a significant increase in the following phase.

Regarding the decree 08/2023, Mr. Nguyen Tuan Anh noted two main points. The first is the extension of bond maturity up to a maximum of two years, and the second is the acceptance of bond payments, including principal and interest, by other assets. In essence, a bond is a form of business loan that must be repaid.

The government's quick action in creating a legal framework for bond transactions is commendable. However, we need to consider whether there will be sufficient liquidity and agreements between bondholders and businesses in the future. Negotiations must take place to determine an appropriate price, or conflicts may arise. The maturity period, from now to June 2023, will be a critical milestone in this process and may cause stress in the valuation between the two parties.

Movements of VN-Index

There are indications that the real estate market is experiencing a downward correction, but the prices have not yet dropped enough to satisfy bond buyers. This is similar to a "call margin" in the stock market, where securities companies recall investors' money and sell their shares if they fail to deposit it. The release of liquidity during this time can cause such stocks to increase for a short period. Once the supply and demand problem is resolved, the market will find a new equilibrium point.

>> VN-INDEX’s downward trend may continue

Has the VN-Index bottomed out?

Regarding the VN-Index, many financial experts stated that the stock market is at a critical juncture in 2023. In the long run, the market is moving towards a huge upward trend.

The VN-Index's lowest support this year is likely to be between 940 and 960 points and may fall between now and June. It will be challenging to determine the VN-Index's exact value. The critical issue is whether the index can maintain its sideways or upward trend.

Mr. Tuan Anh's analysis suggests that the second half of 2023 will be a good time for the market, coinciding with his view on the bond market. After June and July, all bond stories will cease as liquidity eases. At that point, the only variables of concern will be stock valuation and asset value.

Until June or July, Mr. Tuan Anh recommended investors take a defensive stance; in particular, those who are unfamiliar with securities trading should pay less attention to this market. Only experienced investors should attempt to make predictions at this time due to the magnitude of short-term volatility.

"Investors should avoid investing if they lack the knowledge and time to follow the market. Nonetheless, investors can think about investing when there is a noticeable upswing in the second half of the year. Be careful not to be overly avaricious. At certain prices, being in a true upswing with a holding level of 70–100% of the stock, rather than a 5–10% difference in stock value, is more crucial", said Mr. Nguyen Tuan Anh.