Brokers: Recovery signs unsustainable
By Phuong Thao - The Saigon Times Daily
HCMC – The local market slightly bounced back last week but for securities firms, the rally might be short-lived as there were no signs of sustainable recovery over low liquidity.
On the Hochiminh Stock Exchange, the two-day recovery of the VN-Index was primarily driven by a strong jump of VNM as investors continued to buy the VNM shares following its announcement of a bonus share proposal at the 2:1 ratio. Meanwhile, the Hanoi market suffered some modest profit taking last Friday.
Closing the week, the VN-Index added 1.2% against the previous week while the HNX-Index fell a slight 0.6%. Daily average turnover on the combined bourses was down a hefty 27% week-on-week.
Viet Capital Securities Company (VCSC) said news on both the macro and corporate front had been quite slow in the past few days, which could help explain the low volumes on the two exchanges last week.
“While the markets ended on a high note, we, from a technical view, will be closely watching trading sessions on Monday and Tuesday. The VN-Index is close to a technical resistance at the 50-day moving average. We would need a clear break above this level to firm up our recommendation to jump back in,” it said.
“Talking to investors, the general view is that first half earnings were so-so and that they were not really surprised given the economic backdrop. And we think as investors are wrapping up their assessment of first half results, we should see more trading activity as they bet on the second half outlook,” VCSC added.
HCMC Securities Corp. (HSC), meanwhile, said low volume last week did not necessarily signal the end of a downtrend while commitment from buyers was necessary to drive up prices. Prices can fall due to lack of interest from both buyers and sellers.
HSC said the short-term trend rating remains ‘down’. While the VN-Index is still in a narrow range from 412 points to 420 points, the overall defensive bias is dominant and a break below 412 points would trigger a deeper decline to the better support area of 405-395 points, HSC said.
“We, however, are cautious with the strong selling pressure from resistance zone of 420-427 points and keep staying on the sidelines, wait for a fresh buy signal before suggesting investors to buy back stocks.”