Stock market liquidity decline is worrying?

In recent sessions, market liquidity dropped sharply in April.

Ending the session on May 11, the VN-Index increased by 7.97 points (+0.62%) to 1,301.53 points. The whole floor had 294 gainers, 143 losers and 59 standstill stocks. HNX-Index 3.02 points (-0.92%) down to 333.04 points. There were 144 gainers, 66 losers and 45 standstill stocks on the whole floor. UPCoM-Index fell 0.27 points (-0.27%) to 98.79 points.

Notably, although the market recovered in points with the second gaining session in a row, thereby reinforcing the signal of successful bottom testing in the previous session. However, market liquidity dropped sharply compared to the previous session. The total matched value reached 11,495 billion dong, down 35% compared to the previous session, of which, the matched value on HoSE alone decreased by 36% to 10,294 billion dong.

A total of 381 million shares were successfully transferred compared to the average of 603 million shares 10 days ago. Foreign investors net sold slightly at 87.4 billion dong on the whole market. The selling concentrated on stocks such as VNM, E1VFVN30, DXG, MSN, NVL, etc. On the other hand, DPM, CTG, DGC, VHM, FUEVFVND,… net buy in this session.

Prior to that, liquidity was weak plus a decline in most industry groups, and the cash flow in the market was showing a not-so-obvious trend in the last few trading sessions of the week.

Market liquidity dropped to a low level, although a positive sign is that market breadth is very positive thanks to the return of midcap and smallcap stocks, especially small-cap real estate stocks with many stocks. The stock closed at the ceiling price.

According to FiinTrade’s Quarterly Stock Market Report Quarter 2, 2022, the liquidity of the whole market dropped sharply in April, most notably the cash flow of domestic individual investors.

Specifically, in April, individual investors had the strongest net selling since the beginning of 2021 with a total net selling value of 4,300 billion dong while there were months of record net selling of tens of trillion dong such as in March 2021, November 2021. This is also the second month that this group turned to be a net seller. In January, they sold about 3,000 billion dong.

However, FiinTrade data shows that the amount of money on investors’ accounts at securities companies did not increase in proportion to the net sold amount, deposit balance/account of individual investors in The first quarter of 2022 is not significant, even down compared to the fourth quarter of 2021.

On the other side, foreign investors disbursed very actively after nearly 2 years of net selling.

According to MBS Securities Company, market liquidity is low, but cash flow is showing signs of returning to speculative stocks, especially small-cap real estate stocks with many stocks closing at ceiling prices as in session 11. /5. Technically, the market is recovering thanks to reduced selling pressure, investors still doubt the technical recovery span like at the end of April, so the liquidity may still be low. The VN-Index is having a divergence with an upward reversal signal, the recovery level in the next session might be at 1,315 points before filling the GAP.

Technical chart of VN-Index movement (Source: MBS).

According to Mr. Nguyen The Minh, Analysis Director of Yuanta Securities Vietnam, the market may continue to recover and the VN-Index may still retest the resistance area of ​​1,315 – 1,328 points.

“At the same time, the market shows signs of entering a short-term accumulation phase and short-term risks are slightly reduced, but short-term cash flow is still weak, showing that short-term investors are not ready to return to the market yet. In addition, the short-term sentiment indicator increased slightly, showing that short-term investors are less pessimistic,” said Mr. Nguyen The Minh.

According to DDDN