Record trade volumes hint at recovery phase

The Vietnamese stock market last week achieved its highest-ever trading volume, restoring confidence in its long-term prospects.

The market recorded a new high trading volume of over 118 million shares, valued at about VND3.5 trillion ($196.85 million) on May 6, at Hanoi and Ho Chi Minh stock exchanges.

The following trading days betrayed many analysts’ expectations of a considerable drop in trading volume, with ongoing high matched orders of 66 million shares on May 7 and 80 million shares on May 8 in both bourses, valued almost VND1.93 trillion ($108.55 million) and VND2.325 trillion ($130.75 million), respectively.

Analysts said high liquidity, especially with significant ask orders, demonstrated the market’s optimism at a long-term stock market rally. Tran Hoang Son, customer executive of EuroCapital Securities Company, said that high market liquidity signalled the investors’ readiness to join the market and promised a sound market recovery.

“Market confidence has been confirmed and reinforced, with positive supporting information from United States’ stock market, property market and unemployment rates,” said Nguyen Thanh Hai, An Binh Securities Company’s (ABS) director of Individual Customer Centre. Furthermore, the large demand for shares demonstrated the financial potential of Vietnamese investors and the stock market.

Hai said that investors’ financial standing remained high, as the total money deposited in investors’ accounts at ABS during February and March was disbursed at about 30 per cent. ABS was opening 30 to 50 new accounts each day and more money was pouring into new and existing investors’ accounts.

Domestic institutional investors created the major demand for the market, while individual investors sold more, Son said.

“However, the market appeared to be a bit over excited, as many investors were rushing to buy penny stocks [stocks that trade at relatively low price, liquidity and market capitalisation, usually highly speculative and high risk], which weren’t appreciating a few weeks ago,” Hai said. Though foreign investors were net buyers over the last week and over the first four days of May and they bought more than VND700 billion ($39.36 million), they still remained cautious.

The latest HSBC report on the Vietnamese economy said that the worst was over. However, it said, other markets in the region were still more attractive and less risky than Vietnam. Hai said that funds started to disburse more but stayed hesitant. They appeared not to hold in the long-term and would sell as soon as there was a chance to make a profit.