Stock market focus: Possibility to “open the door” and question mark with bank stocks

10 min read

The market this week focused a lot of attention on information about the possibility of economic opening in Ho Chi Minh City and some southern provinces. Last weekend, leaders of Ho Chi Minh City said that the city expected to ask the Government for 2 more weeks to achieve the goal of epidemic control.

In the market, banking stocks are standing on the sidelines while watching other stocks increase in price. Will developments in this group be changed? The market is appearing to withdraw capital gradually? What should investors pay attention to when trading today?

BizLIVE recorded sharing from experts of some securities companies.

The deadlocked investment cash flow still finds the stock channel

Mr. Huynh Anh Tuan, General Director of Dong A Securities Company

The market this week is still in a hesitant trend but will turn to a positive state. The supportive motivation came from banking group, although it didn’t increase strongly, it still supported the index.

Currently, the cash flow is moving through small and medium-sized stocks and will look to accumulating stocks, welcoming the wave of public investment and reopening the economy such as seafood, steel, food, retail… Particularly, banking stocks, which have adjusted by 20%-30% recently, have partly absorbed information that bad debts are expected to increase in the near future; and is currently in a positive state with the information that the SBV has issued Circular 14 amending Information 01 to allow banks to continue restructuring debts and accompanying businesses to overcome difficulties. This group of stocks is likely to receive a large cash flow back in the end of the third quarter and the beginning of the fourth quarter when the lockdown is eased and many businesses return to work under new normal conditions.

However, the bank line that wants to increase requires quite a large amount of money to activate. Those will be big investors, bankers, big “teams” participating in creating liquidity in this group. But the big “team” looks at how the market opens, when will it open. While this is still a rather vague question at the moment, the group has yet to act.

Despite social distancing, investors who opened new accounts in August reached 120,000 accounts continued to increase despite strict distancing conditions in recent times, which is a positive thing for the market.

If the operation is reopened, the mobility will be better, the cash flow will then participate actively. Because currently people with money want to invest in securities but it is difficult to transfer money online, it is even more impossible to go to the bank. Because of the road permit, the branch is not open. So, if reopening, the subjects who are participating in the stock market will increase the source of investment money. Because if opening, many activities are not normal, cash flow is still deadlocked, must find some investment channel, which is currently investing in securities.

The current factor needs attention, if the market rises to a certain threshold, it may face a scenario that has happened in the past. It was 2007 when the stock market rose and real estate also increased. But when the stock market started to go down, the real estate market was still up. And then the stock market crashed.

Observations show that now some investors follow the old scenario, it seems they are waiting for the stock market to explode and they sell out, going back to the old process. Many people hold a few hundred billion and watch when they can sell, they said they are watching real estate. Many investors believe that the real estate market will have a slumping period, they prepare money for this scenario.

If you notice many businesses are holding large cash, but the bank debt is also large. They accept high-interest bank loans and use that money to save low-interest savings. Those businesses that are accumulating cash, they accept not to pay bank loans, they are aiming for the scenario, after this difficult period, there will be classes of businesses in difficulty. Right now is the time when they can’t contact each other, but then any business holding cash is king. There will come a time when cash is king. They will buy projects, will M&A a series of projects.

Currently, the biggest concern of the market is the net selling of foreign investors (foreign investors). Although the current P/E is quite attractive, the selling volume of foreign investors increased. There are two problems, currently there are 2 relative net sales, first foreign investors net selling, second recently net selling treasury stocks, major shareholders, insiders. This is a disadvantage for the market. In the coming time, if this factor continues to increase but the cash flow from individual investors cannot balance this flow, the market pressure must go down.

Investors should be cautious about the overheating of small stocks with high speculative nature, fast cash flow in and out is also very fast; Because of the current difficulties, it is likely that the 3rd quarter business results of these enterprises are not satisfactory, so this price increase is likely to come from the speculative group exiting the goods.

The market is likely to fluctuate in the range of 1,330 points – 1,370 points

Mr. Do Trung Thanh, Head of Business Analysis Department – Petroleum Securities Company (PSI)

In fact, the stock market in the past week has received the flow of information about the city. HCM started to implement the first phase of the opening and increase quite well as some businesses announced the expected business results in August. Basically, even if more time is needed to control the epidemic, sooner or later easing will take place.

The stock market last week also increased but only a few sectors, and VN-Index did not increase too strongly. The impact of the above positive information on the market in the coming period is unlikely to be too great because the opening schedule still depends on the disease control process as well as the vaccination progress.

Therefore, I think the possibility that the market will still move positively this week, but the increase is difficult because of the lack of supporting information and currently there is no leading blue-chips group. The market is likely to fluctuate in the range of 1,330 – 1,370 points and the cash flow will continue to diversify into stocks benefiting from the easing of social distancing.

The recovery trend of the stock market also depends on the roadmap to loosen the distance, depending on the epidemic situation and the speed of vaccination. However, according to information quoted by WJS, members of the Fed may begin to implement the process of reducing the amount of bonds purchased from November at the latest meeting on September 21-22, signaling too much of this to happen. The “tapering” process in the Fed’s monetary policy will affect the world stock market in general as well as Vietnam’s stock market in particular.

Therefore, I think the market will continue to fluctuate with the recovery trend as the main one, but it will be difficult to expect strong uptrends to appear and there will be a large divergence among industry groups.

In my opinion, it is not too risky for the market to have a strong rise in marign in August and return to near record levels for the following reasons.

Firstly, the stock market has had a cooling correction in the past 2 months, making F0 investors more cautious and proactive in regulating margin usage.

Secondly, the stock market is still an attractive investment channel for people at the present time, this is reflected in the number of new accounts opened in the last 3 months always over 100,000 accounts to add a new cash flow to the stock market.

Currently, securities companies are allowed to lend no more than 200% of their equity, so the recent completion of capital increase will mainly create room to meet the needs of investors in the future, contributing to improve liquidity for the stock market in the medium and long term.

Currently, I think that the group of stocks that benefit from public investment such as infrastructure construction, construction items will be the group of stocks to note because this is a fast-acting activity in the process of economic recovery.

In addition, investors may also be interested in energy, retail and logistics businesses when domestic demand increases strongly again after the distance.

For aviation stocks that have risen sharply over the past week on expectations of easing, however, the room for price increases in the near future will not be much because the increase in the share price will depend on the core weakness of revenue and profit growth, However, this industry group will take a long time to resume business operations.

The possibility of speculative cash flow, people who consider securities as a “temporary occupation” will withdraw

Mr. Bui Van Huy, Securities expert

Regarding the drop in liquidity last week, the fact probably comes from the fact that the market is not ready to overcome important resistance. Indeed, the distribution session of about 40 trillion on HOSE is something that is not easily overcome overnight. Especially, it was the second distribution span, with a lower peak but higher liquidity.

To break through some resistance to confirm entry into the wave, not just the passing score is enough. VN-Index has long been known to be easily disturbed by some particular large stocks or low liquidity. To confirm that the market enters a new wave, it needs a convincing score, convincing liquidity and convincing breadth. The current liquidity problem needs to be solved first, because objectively, don’t talk about the peak (score), let’s solve the problem of supply and demand (liquidity of clamps) of the previous peak areas.

Stock prices are supply-demand. But in fact in analysis, people ignore the important part that is… supply. No matter how strong the money is, but the supply increases more strongly, it will be difficult for the price to increase, let alone withdraw money. In fact, the supply of securities increased sharply after the recent issuances. This is a bit reminiscent of 2018 when a series of major releases occurred. In 2019 and 2020 there was no significant increase in supply, so it can be seen that the upward wave from the market bottom to the end of 2020 takes place very gently. According to statistics from HOSE, from the beginning of the year until now, on HOSE alone (excluding HNX and UPCOM) there have been nearly 8 billion new shares listed on the floor. Of course, not all new stocks are floating but must be based on freefloat, but it must be admitted that in recent times, if many stocks are traded, the supply pressure will be clearly felt.

Regarding the expectation of reopening and impacting the market, it should first be affirmed that, to analyze stock market trends, the only thing that should be looked at is supply and demand. Supply and demand are the overall expectations of many factors, from the biggest factors from a macro perspective, inter-market, to smaller factors in the industry and business. Therefore, only a certain event to conclude whether the market will go up or down such as “epidemic peak, stock bottom” or “epidemic at home does nothing to pour money into securities” or “reopen the economy money will withdraw from the stock” will become one-sided.

Regarding the economic reopening of Ho Chi Minh City, the possibility of speculative cash flow, people who consider securities as a “temporary occupation” will withdraw to normal activities. This has a basis. On the other hand, there will also be a return of money, which is people who previously withdrew from the market due to COVID-19 concerns. Which cash flow is larger needs to be observed. It also does not rule out the possibility of more cash outflows, but even so is healthy. The market will be less speculative and more investible, and the stock market, although with less cash flow, is based on an economy gradually recovering from the pandemic, which is good news. There is always no shortage of investment opportunities.

In general, in the coming time, the market needs a return of liquidity, otherwise the answer that money in or out will prevail is clear.

Excessive speculative sentiment has appeared in the group of small and medium-sized stocks, so the correction is also normal. It is undeniable that many small and medium-sized stocks have good stories to lead about industry waves, but there are also many stocks that have increased without any fundamentals. Of course, when the money is withdrawn, the risk will be very high in this group. Therefore, investors need to see more about the basic business, valuation and risks of each business before deciding to participate

About the money moving to large stocks, this is not really clear. Specifically, the liquidity of pillar stocks did not improve significantly. When the group of stocks stops falling and the market has some recovery sessions, many experts or research departments of securities companies often give recommendations with the expectation of going up. Last week, the banking group was highly recommended. But it must also be affirmed, if in the short term, they are not the ones who decide the trend. Cash flow, especially smart cash flow will determine this. The market is always right and the money flow is to follow for short term trades, “Trade what you see, Not what you think”, look at reality and don’t force the market to follow your expectations. Don’t trust anyone if they think like that.

Looking straight at the group of stocks as well as the market, need to deal with the volume of distribution sessions. Need to rally through resistance along with breakout of price, liquidity and breadth. Many key stocks also increased their supply a lot through issuance in recent times. Investors can still confidently buy before these developments happen when you find a compelling reason and are sure that price and liquidity will do the above in the short term. Or more simply, market maker or smart money flow.

Source: – Translated by