The VN-Index on November 8 made a jump of 33.14 points (+ 3.07 percent) to 1,113.4 points with securities and real estate stock prices soaring. This was the sharpest increase globally.

The strong recovery of the VN-Index has helped drown the doubts about the ‘health’ of the national economy amid pressure in the world, from the exchange rate to political uncertainties.

In addition, the recovery of many stock markets has helped restore domestic investors’ confidence on the Vietnamese stock market. 

On November 8 night (Hanoi time), S&P500 and Nasdaq witnessed one more session of increase. European stock indexes were also recovering, while slight corrections were seen in Asia. In general, the global stock market is going positively as dollar price increases stopped, crude oil price decreases, and government bond yields.

Around the world, investors are preparing for the scenario in which the US FED continues to be cautious and it doesn’t intensify the tightening of monetary policy. Therefore, the US economy is expected to have a soft landing.

Prior to that, the US stocks were described as oversold over the last few years.

On November 8, the world crude oil price dropped by 3 percent to a 3-month deepest low. The WTI prices dropped to $75 per barrel, and Brent oil to below $80 per barrel. 

The oil price falls were attributed to the worry about weak demand from the US and China. The US’s crude oil inventories have increased sharply, while retail in Eurozone decreased.

The dollar on November 8 in the US market increased at the beginning of the session, but dropped sharply later. The DXY, which measures the fluctuations of the US dollar against the basket of six major currencies, hovered around $105-106 points, which is seen as an active factor for many countries.

Prior to that, investors feared the DXY may reach 110. As the exchange rate pressure has eased, the stock prices have increased again.

In addition, the government bond yields in Asia also dropped sharply, thus easing the pressure on exchange rate. The Vietnamese government 10-year bond yield dropped from 3.2 percent per annum in late October to below 2.8 percent.

The dong/dollar exchange rate has narrowed. Vietcombank’s quoted dollar price dropped from VND24,750 per dollar in early November to VND24,540 per dollar on November 9. Since the beginning of the year, the dollar has depreciated by 3 percent.

The liquidity is high in the interbank market. The overnight interest rate has fallen to below one percent per annum. The number of bond issuance campaigns to withdraw cash from circulation is small, just VND5 trillion a session at the interest rate of one percent per annum instead of 1.5 percent as seen in October and early November.

Meanwhile, VND10-20 trillion worth of 28-day T-bonds were issued each session in October.

Bright future awaits

The increase of more than 33 points in order matching liquidity on November 8 helped the VN-Index surpass the important psychological support level of 1,100 points. This helps improve investors’ state of mind.

However, this was not too impressive. Since the beginning of the year, the VN-Index has slid to below and exceeded the threshold many times.

What concerns investors now is whether the recovery will continue and whether market liquidity will increase further, or stay at VND21,000-22,000 as seen on November 8.

Vietnam’s stock valuations have become more attractive after the strong correction campaign which lasted a couple of weeks. In the long term, securities companies and experts believe that the PE forward (price on earning) at 10-11x as currently seen now is attractive to long-term investors.

According to Maybank Securities, investors can increase the proportion of stocks with important changes after the November 8 session, and take full advantage of short-term fluctuations to establish new buying positions.

The liquidity on November 9 continued to stay at high level though not that impressive. The liquidity had reached VND5 trillion by 10 am on HCM City Stock Exchange (HOSE) and VND16 trillion by 2 pm. Investors still were cautious, while the VN-Index went up and down, but fluctuations were not strong.

According to ACB Securities, there is no risk from the national economy. The exchange rate and liquidity have gained a new balance point, while the growth rate in the fourth quarter is expected to be better than the second quarter.

Manh Ha