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Stocks fall the most in 2 years: Are stocks ‘cheap’ enough to catch the bottom?

VN-Index has just experienced the strongest drop in over 2 years. In May and the psychological effect of ‘sell in May’ on the recent strong correction of the market, what factors should investors consider and how to act?

VN-Index has just experienced the strongest month of decline in more than 2 years (from March 2020). The main index fell 125.35 points or 8.4% in April ending the month at 1,366.8 points, monthly liquidity fell 27% from the previous month and down 21% compared to the 5-month average.

There was a reversal in market supply and demand in terms of positions of investor groups. Private investors were net sellers, in contrast, domestic and foreign institutions were net buyers.

At the talkshow “Overcoming fear” organized by the Investment newspaper, Mr. Do Bao Ngoc, deputy general director of Vietnam Kien Kien Securities JSC, said that this adjustment is a big adjustment but not a big downtrend, too. market balance and recovery will take place in May.

He said that this year is not “sell in may” but “buy in may”. The market is at the point of recovering equilibrium. This is a good opportunity for investors to participate in the market and choose stocks with growth potential.

In Vietnam, there has been no move to increase interest rates by the State Bank, but overnight interest rates have increased within a month now. When interest rates increase, that is a signal and Vietnam is usually 1-2 months behind the US market. When the market drops, the peak is more obvious.

The market also undergoes re-valuation, the process of deepening and deepening the pain is greater, because of external factors related to criminal prosecution, stock market misconduct, rumors of arrests. Unfounded spread on groups, zalo… The market adjusted initially due to the valuation factor and then adjusted further because of investors’ fear related to the lawsuits against some leaders. business ethics, or baseless rumors.

Sharing about stocks that need attention at this time, Mr. Ngoc said that in 2022, the first interesting topic is the recovery of the economy after COVID-19. Industries closely following the economic recovery include banking, financial services, and retail.

In the report “Market strategy May 2022 – Is it time to disburse?” Recently announced, the analysis team of VNDirect Securities said that Vietnam’s stock market valuation is currently at a very attractive level for long-term investors, who are looking for well-governed companies with a high level of investment. high profit growth. “Recent efforts of the authorities in improving the transparency of the stock market will bring confidence to domestic and foreign investors and contribute to the sustainable development of the stock market. market in the long term”, the expert assessed.

Foreign investors net bought more than 3,900 billion dong, which stocks?

In 2020, the stock market once decreased by 33.51%, bringing the VN-Index from 991.46 points on January 22, 2020 to 659.21 points on March 24, 2020. After that ‘crash’, the market took 10 months to return to the old price, and then went up again.

According to data from FiinGroup, all industries dropped in April, while the group with the biggest drop was oil and gas -20.9%; construction and materials -19.6% and financial services -18.1%. The strong divergence occurred mainly in the industry groups when recovering in the last sessions of the month.

Foreign investors net bought 3,914 billion dong on HoSE in April, in order-matching transactions alone, they bought 1,828 billion dong.

Foreign investors had the first month of net buying in 2022, notably in the context of their net selling in the past 18/21 months. The last month before – July 2021, foreign investors were net buyers when the VN-Index plummeted by 6.99%.

For order matching transactions, foreign net buyers focused on VNM, GEX, DGC, DPM, NLG, MSN, VRE, FUEVFVND, DXG, DCM. The characteristics of stocks that were net bought were mainly mid-caps. Some stocks have growth stories like DGC, or recover like VRE, and benefit from rising commodities, war like DPM, DCM and food like MSN, VNM.

Thus, foreign investors net bought DCM for 9 consecutive months, net bought DGC for 3 consecutive months, net bought VRE and DPM for 2 consecutive months. MSN and VNM started to be net buyers in this April.

On the contrary, foreign investors strongly net sold some stocks VHM, HPG, VND, VCB, SSI, HCM, OCB, PHR, E1VFVN30, VHC. Notably, they strongly sold securities stocks because this sector was directly affected by recent market purification measures. Securities was the biggest drop in the market, losing 27.8% since the beginning of the year.

Individual investors turned to a net selling of 4,555 billion dong on HoSE, of which the net selling order was 3,787 billion dong. Top stocks that were net bought included VHM, VPB, DIG, HPG, and VND. Meanwhile, they were net sellers: VNM, ACB, NVL, MWG, TCB.

Domestic organizations: continued to buy 740 billion dong, in order-matching transactions alone, they bought 1,866 billion dong. They bought the most in order-matching HPG, ACB, MWG, TCB, FPT, and sold the most with matched orders DIG, VPB, FUEVFVND, CTD, DGC.

According to TPO

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