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Market comment
One-day rally unlikely to maintain momentum
The markets turned around suddenly early on and pulled off a spectacular one-day rally. Early weaknesses came to an abrupt end and investors piled back in, causing bid levels to soar quickly. Market breadth widened dramatically and levels of participation improved and we saw higher turnovers. The exact trigger of all this is hard to pinpoint although, as we mentioned Tuesday, we were expecting to see a temporary bottom sometime this week.
The Bao Viet (BVH) listing today and some 1-H window dressing by funds have both been mentioned as possible reasons for the jump but the truth is it’s likely that there were a number of reasons. The more important question now is where does this leave us? In our opinion it’s possible for the market to move higher for a day or two but we still believe that we have not yet seen the bottom in this correction. So any mini-rally such as we saw Wednesday is likely to be temporary and we do expect the market to test down to 400 at least over the next few weeks.
Meanwhile, BVH was last traded in the OTC market at VND38,000, close to the proposed listing price. On a price-to-earnings and price-to-book basis, the stock doesn’t look that cheap to us although we feel the share price may be supported for the first few days after listing. However, with VCB coming soon afterwards, the markets will be a little bit nervous about after market sentiment. And if either stock starts to decline the whole market will fall with them.
Ho Chi Minh City Securities Corporation (HSC)
thanhnien
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