Although the financial report for the second quarter of 2023 is still not out, the stock market has shown a surprisingly significant growth in May and June.
Despite investor fears, the stock market has seen an increase of approximately 1.1 percentage points in the VN Index in May. Although, it is the influx of short-term capital that has been driving the markets during this subdued phase.
The sudden reduction in operating interest rates by the State Bank of Vietnam caused a sharp drop of 9.83 points in the VN index between 3 April and 12 April.
The Government is focused on removing difficulties and obstacles for the capital market in 2023. It wants to remove obstacles in cash flow, support businesses, and improve competitiveness to boost the economy.
Foreign investors have maintained a net buying position on the stock market since November 2022, partly contributing to maintaining confidence in the recovery of the VN Index.
Many giants on the stock exchange saw a drastic fall in stock prices in 2022, with losses amounting to more than US$11 billion. This sharp correction of the stock market last year also caused huge losses for several retail investors as well.
At the end of the financial year, the market is often bullish. This occurs on the belief that mutual funds will beautify year-end reports by pulling up stock prices for the sake of shareholders.
The VN Index is ranked among the group of stocks with the strongest decline in the world of 42 percent since the beginning of the year. However, besides plummeting at some sessions, the VN Index is also unbelievably gaining in some sessions as well.
Although the VN Index has returned to an attractive level compared to previous sessions, issues such as low-levels of liquidity and corporate bonds risks still need to be resolved for the market to once again gain momentum.
During the last seven to eight trading sessions, the VN Index suddenly went down and then up again to bottom at 1,150 points. The Index almost stood still and always looked like it was going to break bottom. This resulted in a loss of liquidity in the stock market that left several investors doubtful.
The first months of 2022 have been turbulent times for the stock market; the market has been volatile in recent sessions. In addition to the influence of cautious psychological factors, many investors have been greatly affected by fake news and rumors on social networks. Accordingly, Ms. Ta Thanh Binh, Director of the Securities Market Development Department under the State Securities Commission advised stock investors should be alert to fake news and rumors to avoid psychological impacts leading to mistakes in investment decisions.
The euphoria among young investors in the last weeks seems to be dying down now, with many F0 investors realising that the stock market is no longer an easy place to reap profits.
The trading volume of the VN Index increased dramatically in November 2020, at an average of around one billion shares per day or sometimes even about 1.5 billion shares per day.
Vietnamese shares are forecast to extend their growth in the final week of August by a marginal rate while volatility is widely expected by analysts as buyers are believed to be cautious due to the lack of news that could bolster optimism in the market.
Vietnamese shares bounced back on Thursday after Wednesday’s sharp fall sent stocks down to attractive prices, thus triggering investors to bottom-fish.