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How is the Vietnam stock market after Lunar New Year?

Thursday 30, 01 2020
History shows that Vietnam's stock market has a high probability of going up after the Lunar New Year. Securities companies forecast that in 2020 VN-Index may surpass 1,000 points.
How is the Vietnam stock market after Lunar New Year?

In 2020, Vietnam's stock market has turned 20 years old.

According to the 19-year VN-Index statistics of the Companion, there were 13/19 times the index increased in the last 5 days before Tet and 12/19 times the VN-Index increased in the first 5 days after Tet.

On average, the VN-Index increased in the first 5 days of the new year is more than 63%. If calculating the average of the past 19 years, the VN-Index has increased by 1.28% in the first 5 days after Tet.

According to the statistic table in 14 years of operation, HNX-Index has been very active and has 12/14 increases in the last 5 days before Tet. Meanwhile, in the first 5 days after Tet, this index increased by 9/14 times, equivalent to 64%. On average, HNX-Index increased by 0.71% in the first week after Tet.

According to the statistics of Bao Viet Securities Company (BVSC), from 2010 until now, the market usually rallied in about 10 sessions before the Lunar New Year. As per BVSC's observation, the market gained 9/10 years with an average increase of about 4.57%. However, liquidity often decreases during this time. Only 3/10 years, trading volume increased in 10 sessions before Tet and only 4/10 years, transaction value increased. The average reduction of trading volume was 16.43% and trading value decreased by 17.25%. This is because investors often restructure their loans and avoid holding them during the Tet holiday.

However, the market usually gains in 10 sessions after Tet holiday but with a strong increase in trading volume and value. VN-Index increased in 8/10 years with an average increase of 4.31%. Trading volume increased for 8/10 years with an average increase in those 8 years at 45.03% and trading value increased by 9/10 years with an average increase of 40.31%.

How is the Vietnam stock market after Lunar New Year?

BVSC believes that investors can safely hold and maintain a proportion of stocks in the portfolio through Tet because of the probability that the market will continue to increase after Tet with about 80% and that the market's gains often get the support from trading volume and value.

If we only include the first trading session after Lunar New Year, the Statistics of the Companion shows that VN-Index had 12 increasing sessions and 7 decreasing sessions. Averagely, the increase is 1.03%.

The HNX-Index has had 11 increasing sessions and only 3 decreasing sessions on the spring trading day with an average increase of 0.84%.

The market is expected to be positive in 2020 but similar to that in 2019

In 2020, many securities companies predict that the market will move in a positive direction, but there are many similarities with 2019. Most securities companies predict that the VN-Index can pass the psychological level of 1,000 points - the psychological barrier of the market in 2019.

According to KB Vietnam Securities (KBSV), the market is forecast to be more positive in 2020 thanks to improved market conditions. The biggest risk factor affecting the market in 2018-2019, the US-China trade war, is expected to cool down due to the US focus on the US presidential election.

According to Rong Viet Securities (VDS), the expectations, difficulties and potential risks for Vietnam's stock market are not much different from those in 2019, including expectations about the progress of divestment and equitization of State-owned enterprises on the market's ability to promote. However, there will be no significant progress in these events in 2020. In terms of cash flow, it is difficult to expect the entry of large cash flows from foreign investors, especially when the positive growth in developed economies makes the marginal markets become less attractive.

Some securities companies think that the P/E of Vietnam stock market is at a reasonable level, lower than those of other countries in the region. According to BVSC's analysis with 10.5% earnings per share (EPS) forecast, 2020 P/E is expected to be 14.5 times lower than the current PE and this is a highlight creating an attraction for the market in 2020.

​>> After many consecutive months of net selling, will the foreign capital flow return to the stock market in the last quarter of the year?

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Stock Market

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