The VN-Index may face difficulties in the first half of September due to the restructuring process of exchange-traded funds (ETFs), but it is expected to surpass the 1,000-point milestone in the coming time.
(ETFs - a combination of four foreign ETFs and two domestic funds – normally restructures their bases by gaining more stocks that are qualified for their requirements ( market capitalization and liquidity), and disposing of those that do not ensure profitability on a quarterly-basis.)
Despite the negative news on the US and Chinese trade war and overseas net selling pressure, the growth dynamics of the market in July and August has reinforced the confidence of investors, thereby promoting cash flow.
However, the VN-Index approached the resistant level at 1,000 points while witnessing the restructuring process of ETFs in September when many large-cap stocks seemed to be broken down, squeezing cash flow.
The VN-Index might decrease by 2-3 per cent after hitting 1,000 points, then bounce back in the remaining time of September and head to the 1,030-point level.
The VN-Index on the Ho Chi Minh Stock Exchange closed Friday fell by 0.85 per cent at 989.54 points. The Southern Benchmark Index gained 0.25 per cent for the week.
On the Ha Noi Stock Exchange, the HNX-Index gave up 0.7 per cent on Friday session, reaching at 112.79 points, but it increased over 1 per cent against the last week of August.
An average of more than 225.2 million shares worth VND4.9 trillion (US$212.3 million) were traded in each session last week, decreasing 0.8 per cent in volume yet remaining the same as that of the last week of August.
In the short-term, people should not be too optimistic about the return of foreign capital coming from indirect investment channels like ETFs in the context of the attractiveness of the US dollar and the escalation of the US-China trade war.
However, with the intrinsic appeal of the Vietnamese economy altogether with the IPO roadmap, further enlargement of the foreign ownership and the Government’s determination to upgrade the stock market, it is believed that the foreign capital flows will return to the market.
In the last weeks of September, business results of listed companies in the third quarter will start to be revealed. There exist high expectations of growth for stocks in the financial, consumer, industrial and real estate sectors.
In September, the market would continue to be affected by many external factors including the world trade war and increased interest rates of Fed. On September 6, US President Donald Trump will announce his decision on a plan to impose tariffs of US$ 200 billion worth on Chinese imports. This information will impact the Asian market, including Viet Nam. In the first week of September, the market is unlikely to see positive movements. In general, the stock market might be seen as climbing up but with low liquidity in September.