The VN Index has decreased by 156 points, or 17.7 percent, since the beginning of March.
The newly released report of VietinBank Securities (CTS) shows that there are three important factors which can change the face of the stock market.
First, Covid-19. CTS believes that the market will bottom out in late April and May 2020 in the summer heat, when the epidemic reaches its peak. The market will become more active when there are signs of epidemic control and some countries are removed by WHO from the list of infected areas.
CTS said the financial sector bears a bigger impact from Covid-19 than SARS because of the effects on production and business. The shares of the companies infields related to public utilities such as electricity, water, textbook and essential goods have been chosen.
Second, the oil price. CTS predicted that the oil price will bottom out in June 2020 before it comes back to the $45 per barrel threshold and then will go flat for a long time.
|Thermopower shares will benefit when the input gas price decreases dramatically, while the output product price will not decrease significantly. It has a positive view about basic consumer stocks in the context of the epidemic.|
Learning the lessons from the sharp oil price falls in 2016, CTS says the finance, technology, industrial production and materials are influenced by oil price fluctuations, but they will recover more strongly when the oil market escapes the bottom.
The securities company gave strong recommendations for the shares of financial and technology firms, believing that the recoveries will be bigger than the decreases.
It also believes that thermopower shares will benefit when the input gas price decreases dramatically, while the output product price will not decrease significantly. It has a positive view about basic consumer stocks in the context of the epidemic.
Third, transactions by foreign investors. Not only Vietnam, but many other regional stock markets are witnessing the departure of foreign investors. The pandemic has had negative impact on the global economy which prompted the action of selling stocks.
A question has been raised following the continued stock price decreases whether Vietnam’s securities have become too cheap.
According to CTS, Vietnam’s securities are not cheap. The P/B index is 1.9, the highest level in Southeast Asia and is just lower than India and the US.
Meanwhile, the P/E index is 12.5, which is among the lowest in the region. However, the noteworthy thing is that Vietnam’s stock market is still listed as a frontier market.
Therefore, the company thinks the foreign capital can not come back in the time to come because securities are still not cheap enough, while the economic outlook is not good.
Commenting about foreign investors’ net sale, they attribute this to the fear of recession. Investors tend to withdraw capital from stocks, which are riskier, to invest in bonds which are safer.
The finance ministry’s recent cut and exemption of some securities service fees won't urgently help soothe investor nerves over the spread of the COVID-19 and more strong measures are needed to support businesses, analysts have said.
The news that VP Bank has decided to shift its subsidiary FE Credit, specializing in consumer lending, to a joint stock company from a limited company has stirred up the public.