|
Market comment - July 2
Volume key for a long rally
The markets seem to have hit a bottom for now. Both markets rebounded from their intraday lows, Hanoi spectacularly so, and managed to show some modest gains at the close. From a sentiment standpoint this is fairly significant as it suggests the 420-430 level on the VN-Index is quite a strong support for the index. And Hanoi closed above its medium term trend line having broken downside of it Wednesday.
Market breadth was wider again with the advance decline line moving higher for a second day. Foreigners remained net buyers although their participation was less than Wednesday due to their virtual absence from the put through market. Overall, most shares rose but the index was kept back at the close by weakness in VCB and BVH. So overall sentiment actually may have improved by more than the VNIndex suggests and we would look to the HNX-Index for the moment for the best gauge of sentiment.
The question now is the same one we posed Wednesday. What happens next? A trading rally or something more substantial? And as we wrote Wednesday, volume holds the key to that. Anything above VND1.5 trillion (US$84.28 million) in daily turnover is good news for the longevity of a rally. And total market bids over 15 million at some point in the trading day is helpful too. On Thursday, the market barely fulfilled one of these criteria but not the other as bid levels never exceeded 5 million shares in HCMC. Therefore, market participation needs to improve soon otherwise the rally may be quite short lived.
Either way, we doubt if we will see any large extension of the recent rally at this stage. One key difference between Vietnam and the outside world at the moment is that the State Bank of Vietnam seems to be moving more swiftly to ensure that a credit bubble does not re-emerge. So far, they have handled the slowdown expertly and resurgent inflation is certainly not the reward they are looking for. So credit growth rates are being nudged lower at the moment. This will cap the market for a while, so while we may see a short term trading rally up to 500 or so on the VN-Index, it would be hard to see it break above that level for a month or two.
Ho Chi Minh City Securities Corporation (HSC)
thanhnien
|
