What is the bright spot for the market when Vn-Index “breaks” the 880 mark?

According to statistics in the last 8 years, Vietnam stock market has 7 times in January.

The first days of the new year 2019 are not going smoothly with Vietnam’s stock market. In only 2 opening sessions, VN-Index lost more than 14 points and retreated to 878.22 points, the lowest level since 11/2017.

The VN-Index easily penetrated the strong support level of 880-890 points (VN-Index has recovered many times from this support area in 2018), making investors worry that the market will continue to get worse. , even the opinion that VN-Index may return to 800 points.

However, the deep decline of the market also opened opportunities for investors to disburse. Even in the context of not really positive as at this time, there are still many bright spots for the market.

The first positive factor was foreign trading when they had 7 consecutive net buying sessions with a total value of VND 1,043 billion on HoSE. This is the longest net buying chain of foreign investors since the end of September, early October 2018, when VN-Index is about to create a peak at 1.025 points.

The net buying of foreign investors focused not only on some blue-chips through agreement trade but also a good spread on many codes via the match order, which is quite positive. If in the next trading sessions, the trend of net buying of foreign investors has not stopped yet, market movements may appear more optimistic signals.

The second positive factor is that market valuations have become more attractive. In the period of 4/2018, when Vn-Index created a peak of over 1,200 points, the market P / E at that time soared to nearly 22 and was considered quite “hot”. However, after a long adjustment process, P / E VN-Index has now “cooled down” significantly. According to data from Bloomberg, P / E VN-Index ended the session 3/1 only 15.3. Excluding some large-cap stocks such as VIC, VRE, VHM, the P / E VN-Index is only about 14.x.

In Southeast Asia, Vietnam P / E stock market is slightly higher than Thailand but much lower than Indonesia, Philippines and Malaysia. Singapore market has a relatively low P / E (11.3), but this is a characteristic of developed markets.

Meanwhile, the macro factors of Vietnam are still very positive and are expected to remain stable in 2019. According to Bao Viet Securities, in 2019, Vietnam’s GDP growth will continue to increase. 6.8%, CPI at about 3.5%; Deposit rates are about 7.3%; VND depreciated below 3%.

With the above factors, it can be said that Vietnam stock market is more attractive than the regional level. This will be a factor to attract cash flow and foreign investors’ strong net buying when the market corrects recently may partly come from attractive valuation factors.

The last positive factor is the January effect. Statistics from 2011 – 2018 show that Vn-Index has increased in August 7 in January. Not only that, the increase in January in this period also Very strong with many years increasing over 10%.

The above statistics show that January is the period when the market usually has the most positive movements in the year. With foreign investors gradually net buying again, as well as market valuation is gradually becoming more reasonable, we still have the right to hope for a positive scenario in the rest of the month.

Minh Anh
According to the: Trí thức trẻ