A strong rally of many large-caps lifted the local market up for the second straight session on Wednesday, with the VN-Index gaining 4.49 points, or 0.9%, against the previous session to close at 503.37.
The Hanoi market also edged up slightly in thin turnover of just nearly VND257 billion. The HNX-Index inched up 0.05% and ended the day at 65.02.
Although the VN-Index closed in the green for the second day in a row, tepid liquidity of just 43 million shares traded on the southern bourse signaled continued hesitation and cautiousness.
The question still remained as to whether exchange trade funds (ETFs) had finished selling to rebalance their portfolios or not. The answer would appear to be yes, said Viet Capital Securities Company (VCSC).
Trading data showed a decline in foreign net outflows from the previous day, down from VND150 billion to VND75 billion o the southern bourse, and a fourth consecutive day of foreign net inflows on the northern bourse. With only two days left in the rebalancing period, it would seem that the ETFs were now buying, it said.
“A noteworthy point is that we have noticed more flexibility in the ETFs’ trading methods in recent days. For example, they have been more cognizant of prices rather than buying or selling at any price in the at-the-close (ATC) session.
“This apparent change is very positive as it should alleviate fears of sudden sell-offs and conversely taper price speculation, thus removing a lot of the uncertainty that has been associated with ETF rebalancing in the past,” VCSC added.
HCMC Securities Company said that observable margin trading positions have dropped around 4% from the recent peak as a result of the recent market correction as of Monday.
This is in line with its sense of a mild bout of profit taking by local investors in the face of persistent foreign selling pressure on the back of redemptions, mostly as the U.S.-based retail investors lighten their positions.
Some leading blue-chips have dropped back roughly 20-27% from their year-to-date peak such as GMD, PNJ and HAG while others like REE, PPC, FPT and VSH are down 12-15%. The third group including HPG, POM, DPM and GAS has corrected only slightly by 7-10%.
“In our opinion, the correction so far has been quite patchy and with first-half results coming and little short-term positive news in sight the possibility of a more prolonged period of consolidation looms. Earnings previews so far suggest to us that the numbers likely to be posed by companies from next month don’t look that good. And we are talking here across most sectors. So, whatever the short-term trend over the next few days, the market is likely to move sideways and down over the next few weeks,” the broker predicted.