Downside risk seen clear this week: brokers
By Phuong Thao - The Saigon Times Daily
HCMC – Securities enterprises are concerned that the market could suffer further falls in the coming time as it lost ground again with liquidity dipping last Friday.
The markets ended the week on a low note with technical selling pressures still strong, with the VN-Index shedding 9.82 points, or 2.75%, from the previous week to close at 356.21. These pressures were coming from different sources including portfolio adjustment, and cash raising in anticipation of possible redemption.
The ongoing consolidation of both the banking and brokerage industries is leading to the unwinding of margin trading and proprietary positions. Many smaller brokers are under pressure to repay creditors and secure client money. Moreover, potential buyers are staying on the sidelines as they do not want to buy into a vacuum.
HCMC Securities Corp. (HSC) said it sees some further downside risk over the next few months due to the ongoing correction of the real estate market.
“Valuations in the stock market are already very low. But confidence is even lower over the reasons discussed above. Interest rates will fall but liquidity will not improve much,” HSC explained.
“We are awaiting a deeper correction of real estate prices in the next quarter as well as all banks are getting tough on lending. Once real estate prices fall for a quarter or two buyers may shift out of gold and get back into Vietnam dong-based assets again. Confidence will also be gradually boosted by decelerating inflation, lower interest rates and a steady currency.
“Clearly then we are in the last leg of the bear market where even long-term bulls have turned bearish. Investors should focus on improving their balance sheets, especially companies with high net cash positions, low debt and high dividend payouts. A move into high beta or interest rate sensitive stocks is still premature as there is more bad news to come.”
The broker said that in the meantime, there would be some brief but investable trading rallies in equities as interest rate cuts encourage short-term buyers to return. “We may even be overdue for one of these bounces in the near future. However, the real turn in the long-term bear market will have to wait for the bottoming out of property prices.”
The Hanoi market plunged to an all-time low again after three falling and two rising sessions, with the HNX-Index sliding 1.83 points, or 3.06%, against the previous week to close at 58. The market’s daily trading volume averaged out at 28.3 million shares worth VND241 billion, up 7.4% and 5.6% from the week earlier respectively. Local brokers expect to see more buyers this week as stock prices are dirt-cheap now.