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Recent gains boost investor confidence, analyst says
The VN-Index has edged up over the past fortnight, raising the spirits of investors hurt by the market nosedive during the first six months of the year.
The outlook for the market is looking much rosier than it did a few months ago.
The stock market will struggle to bounce back in the near term but it will stage a noticeable recovery by the end of the year, Dinh The Hien, a Ho Chi Minh City financial expert told Thanh Nien in an interview.
What do you think about the market’s 10-day rally?
Dinh The Hien: A bounce-back of the stock market was inevitable since it fell sharply.
The rally, however, surprised many investors as the country’s economic news in recent months remained on the downside.
Many analysts believed the recovery came in a wake of a slowdown in both inflation and the widening of the trade deficit, as well as the fact that foreign direct investment kept flowing into Vietnam.
But we shouldn’t be too optimistic about the market’s recent rebounds.
Sky-high lending interest rates, which leave both retail and institute investors struggling to raise capital, is one of the main hindrances stopping the market from roaring back strongly.
Foreign investors always seem to do the opposite of domestic investors, buying shares heavily when the market is gloomy. Is it because the two sides’ predictions of the market contradict each other?
I don’t think there are too many differences in their analysis of the market’s move.
Vietnamese investors now have good experience on the stock market.
They usually make contrasting moves because of their position and investment capability.
For example, despite the market’s tumbles early this year, domestic investors weren’t eager to buy as they believed the market would fall further.
Foreign players, who most are investment funds with long-term investment plans, found the market’s nosedive gave them good chances to buy low-priced shares.
I think now is a suitable time for six-month-or-more investment plans.
What is your prediction for the market’s move in the near future? And which factors will help the market grow steadily?
People are keeping a close eye on two asset classes – stocks and the property market.
For retail investors, stocks and property are still the most attractive investment havens.
They believe the two asset classes will recover strongly in the forthcoming time as the economy shows healthier signs.
Most foreign financial institutions forecast the government will get inflation under control and narrow the trade gap.
They also believe the country’s gross domestic product rate, which decreased this year, will rally next year, starting an attractive period of economic growth.
I don’t expect the market to bounce back strongly in the forthcoming time but the market’s recent gains proved effective in building up investor confidence.
I believe the stock market will rise steadily this year end.
How can investor confidence be boosted?
We should focus on improving the market’s transparency, not directly intervening in the market through adjusting the daily share trading band.
We should also improve the stock market’s legal framework so it operates in accordance with market forces, which would offer good protection to retail investors.
Joint stock companies should be more open about their business, to help build up their shareholders’ confidence and attract more investors.
Experiences from around the world show enterprises which are experiencing difficult circumstances can still attract more investors if they show they can develop strongly in the future.
Thanhnien
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