Market set to extend downtrend: analysts

VIETNAM, May 16 – Investors are watching stock movements in front of a big screen. Photo

HÀ NỘI — Markets saw their worst performance since March 2020 last week on heavy selling pressure. Experts said that with current conditions, downside risk still dominates the market.

Last week, the VN-Index of the Ho Chí Minh Stock Exchange (HoSE) broke above the 1,200 point level after ending the last trade at 1,182.77 points. He has lost nearly 120 points in the last two sessions alone.

The Hà Nội Stock Exchange (HNX) index also ended the week at a lower level of 302.39 points.

The market plunged for three out of five sessions.

For the week, the VN index fell more than 11%, while the benchmark HNX North index was down 12%.

On the southern exchange, the value of transactions increased by 79.9% compared to the previous week to reach 84.2 trillion VNĐ (3.6 billion dollars), which is equivalent to an increase of 92.9% trading volume to 3.1 billion shares.

The value of trades on the HNX also increased by 70.7% to nearly VNĐ8.3 trillion, with trading volume up 93% to 406 million shares.

The large gains were mainly due to the number of trading days, as the market was closed for two days the previous week.

Meanwhile, foreign investors recorded a positive week after buying almost VNĐ 1.69 trillion, of which they bought the most from the VFMVN DIAMOND fund with a value of VNĐ 646 billion.

Phạm Bình Phương, an analyst at Mirae Asset Securities (Việt Nam), said selling pressure and investor sentiment of caution as stock prices rose continued to push the VN-Index further lower, especially in the last two sessions of the week with a fall of nearly 120 points. Therefore, the downward trend is overwhelming.

Analysts from Saigon – Hanoi Securities JSC (SHS) said that after more than 10 years, the market has once again experienced a long streak of six weekly declines.

With the downtrend, the market’s benchmark VN index evaporated by more than 22% of market capitalization, while the VN30 index, which tracks the 30 largest stocks on HoSE, also fell by more than 22%. 21% over the past six weeks.

After falling for six straight weeks, the market valuation has returned to a very attractive level with the VN-Index price/earnings (P/E) ratio around 13x and the VN30-Index P/E ratio over of 12, which are lower than the average of the last five years.

If based on the forward price/earnings ratio for 2022, the valuation will become even more attractive. Therefore, it can be seen as an opportunity for long-term investors.

Furthermore, on a technical level, the VN-Index seems to be approaching the objective of the theoretical correction of 1200 points.

However, if the situation turns more negative, the benchmark may still slide towards deeper support levels, with the closest level at 1,100 points.

SHS predicts that this week buyers and sellers will become more balanced as the market has fallen into the corrective wave target zone and also does not rule out the possibility that the market will see a week of recovery after a long streak of losses.

With a combination of market valuation and technical perspective, SHS believes that the 1000-1200 point area, corresponding to the VN-Index P/E ratio of 11-13x, will be an attractive area to disburse capital at. long term. term investments.

Analysts say it’s rare for investors to come under as much pressure as they do now when markets see the US Federal Reserve’s rate hikes, China’s zero COVID-19 policies and soaring inflation. As a result, companies’ first-quarter trading results were mostly positive, but stocks continued to bottom out. VNS

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