Sluggish stock market as investors spooked by uncertainties

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Trading on the Ho Chi Minh Stock Exchange (HoSE) plunged this week to a three-month low of VND9.77 trillion ($412 million) despite forecasts from several brokerages earlier this month that a boom is expected after the market settlement cycle shortened by four hours and odd stock trading resumed.

“We think investors will look for opportunities in the corrective sessions by buying the dip. The VN index may rally soon,” analysts at Rong Viet Securities said.

But the Vietnamese benchmark continued to struggle. Trading on the HoSE exceeded VND20 trillion only once this month, on September 7, when the VN index plunged 34 points.

The average trade on HoSE was VND15.73 trillion in August, less than half of VND32.60 trillion in November last year.

One of the reasons for the drop is the lack of investment opportunities in the market compared to last year and the first quarter of this year, said Le Ngoc Nam, head of analysis and consulting at the broker Tan Viet.

After major arrests and sanctions for stock market manipulation, few stocks jumped, while big companies in real estate, banking and industrials posted low profit forecasts due to economic difficulties, a he declared.

All of this has made it more difficult to identify a strong and profitable stock, and the chances of speculators making quick profits are reduced, he added.

Ha Tien Hoang, client consultant at Rong Viet Securities, said pessimism in the market was a main factor behind the decline.

The dipping sessions in recent months have made investors more vigilant about the use of leverage. Margin lending has fallen by half since March, he noted.

Hoang said improvements in trading techniques such as the shortened cycle and the resumption of odd-stock trading were unable to boost the market as the shadow of a gloomy outlook looks large.

Brokerage analysts did not express confidence of an increase in trading for the remaining months. Most of them forecast average exchanges between 15 and 17 trillion VND.

“Trading remains weak and investors are buying small and medium-sized stocks, which shows that big investments are not ready to come back into the market,” Hoang said.

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