VN-Index struggles to begin a strong upswing

The stock market in Vietnam is more likely to correct downward than to rise.

This week, the VN-Index dropped to 1,031 points before rebounding to 1,059 points. Photo: Quoc Tuan

>> VN-Index to increase by over 20 per cent this year: VinaCapital

Vietnam's stock market has not been particularly motivated during the past week. Even on February 14, there was a severe decline in liquidity as it only reached VND 7,200 billion on three bourses. Because the stock's price range is not very wide, some investors become impatient and sell their shares quickly. Yet as soon as this occurred, the purchasing force surged in, driving the stock price back up.

However, investors did not have many opportunities to drive the stock price higher because cash flow was not very robust.

This week, the VN-Index dropped to 1,031 points before rebounding to 1,059 points.

Notwithstanding this, the VN-Index is still headed steadily downward to 1,000 points rather than upward to 1,100 points. Because there are a number of elements that are currently not in our favor.

The current cash flow is rather modest, and it only becomes significantly stronger when equities are aggressively sold.

>> The VN-Index is under downward pressure 0

Second, there is still a great deal of bad information regarding the capital and debt of businesses. According to statistics, February has the lowest bond maturity, at around VND 6 trillion, with a steep increase beginning in September 2023.

Fluctuations of VN-Index

Third, given that deposit rates are still high, it's possible that cash flow will continue to flow out of the stock market.

Companies that have bonds that are about to mature currently have a big challenge to overcome. There hasn't been much advancement in the macroeconomic environment, and there isn't much knowledge available to assist businesses with bond-related issues. As a result, the companies' stock values will drop. Yet, companies with a strong foundation and stable financial standing will either keep their stock prices the same or move sideways to create a new price base.

In the aforementioned scenario, investors should proceed with caution when purchasing the stock of companies with a significant amount of outstanding bonds, particularly those whose bonds are nearing maturity.