After Van Thinh Phat and Tan Hoang Minh, will 'smart money' be less cautious?

A week full of events

The stock market had a volatile trading week with four sessions of gains and one sharp decline on Thursday.

In the first session of the week on November 20, information about the case of tycoon Truong My Lan causing huge losses, up to 12.4 billion USD, had a significant impact on the psychology of investors, although the shock of Van Thinh Phat was reflected in the price around the same time last year, when Ms. Lan was arrested.

Selling pressure increased sharply in the stock market, causing the VN-Index to drop 15 points immediately when it opened on November 20. However, the issue has been sought for a solution throughout the past year. The State Bank has submitted to the Government a restructuring plan for SCB Bank. Meanwhile, Van Thinh Phat hastily sold assets to remedy the consequences.

Bottom-fishing demand pulled the VN-Index up slightly again in the first session of the week.

The market maintained green in the next two sessions.

The recovery was led by steel stocks, securities and some real estate stocks. Expectations of rising construction steel prices and forecasts of recovery in the construction industry in 2024 helped steel stocks perform positively. Some steel companies have recently adjusted construction steel prices up by VND110,000-410,000/ton after about 3 months of flat growth thanks to improved consumption.

chungkhoannamkhanh 1 ok.jpg — *The stock market experienced a week of strong fluctuations. (Photo: HH)*

In the group of petroleum stocks, the decision to reduce the time to adjust the base price from 10 to 7 days, the premium (rewards, incentives, interest, insurance fees...) to calculate the price of petroleum from domestic production sources reduced from 6 months to 3 months or allowing retailers to receive gasoline from a maximum of 3 distributors supported the increase in points of this group of stocks.

In addition, the real estate group, especially Novaland , was sought after by investors in mid-week sessions when the Prime Minister held a heated meeting to resolve difficulties and obstacles in implementing large real estate projects, including Novaland's Aquacity.

However, further information about the Van Thinh Phat case and then the indictment of the Tan Hoang Minh case as well as concerns about corporate bonds maturing in 2024... made many people worried.

The stock market was unexpectedly sold off heavily in the afternoon session on Thursday (November 23), causing the VN-Index to close down 25 points in the ATC session at the end of the day. The unexpected plunge of the session caught many investors off guard and triggered a sell-off. The decline continued for most of Friday (November 24) before bottom-fishing demand increased, helping the VN-Index recover and increase by 7 points in the final session of the week.

At the end of the week, VN-Index closed at 1,095.6 points, equivalent to a decrease of 0.5% compared to the end of last week; HNX-Index recorded a decrease of 0.2% to 226.1 points and Upcom-Index dropped sharply by 1.2% to close at 84.99 points.

During the week, the pillar stock that fell the most was Mobile World MWG (-6.9%). Techcombank (TCB) fell 3.5%. Vinamilk (VNM) fell 2.4%. On the other hand, Novaland (NVL) rose 9.3%. BIDV rose 1.7%.

Liquidity on the stock market remained unchanged with a trading value of VND21,191 billion. Foreign investors continued to return to net selling on all three exchanges with VND954 billion, mainly on HOSE with a value of VND910 billion (-32% compared to last week).

Many bad forecasts, but the uptrend has not been violated yet

At the recent seminar "Macroeconomic and stock market outlook in 2024", Mr. Nguyen Quang Thuan, Chairman of FiinGroup, acknowledged that Vietnam's recent macroeconomic context has shown signs of improvement in many important indicators. However, FiinGroup believes that stock valuations are no longer cheap, and the price/earnings per share (P/E) ratio has reached a historic peak if the real estate group is excluded.

However, Ms. Do Hong Van - Head of FiinGroup Data Analysis Team - analyzed that although the macro context has many bright spots, investors need to look deeper into each industry layer and stock layer within to assess the real valuation of the market.

Accordingly, in the third quarter of 2023, the profit picture of listed enterprises has not had a breakthrough. The profit of the whole market decreased by about 1.7%. The P/E valuation of the whole market is at 13.1 times - lower than the average period from 2015 to present. If excluding the real estate group, the market P/E has reached 23.5 times - higher than the valuation when VN-Index surpassed 1,500 points to set a historical peak.

But on the contrary, many experts and investors bet more on positive macro signals, abundant liquidity in the banking system and the possibility of strong cash flow into stocks.

*The State Bank continues to pump a large amount of money back into the market through maturing treasury bills. (Chart: M. Ha)*

Mr. Dinh Quang Hinh, Head of Market Strategy Department, VnDirect Securities Analysis Division, said that the recovery trend of the domestic stock market has not been violated, especially after the weekend session, November 24, when the stock indexes recovered impressively and closed at the highest level of the session.

According to Mr. Hinh, it is likely that the VN-Index has successfully formed a second bottom at the 1,070-1,080 point range. At the same time, the market also received more positive macroeconomic information. Specifically, the cooling pressure on exchange rates created conditions for the State Bank (SBV) to stop issuing treasury bills and pump back liquidity into the banking system.

In fact, in the past two weeks, the State Bank has not withdrawn money from the open market, while pumping money out through maturing treasury bills, about 40-50 trillion VND.

Some commercial banks continue to adjust their deposit interest rates, including BIDV, which reduced the 12-month deposit interest rate to 4.8%. These developments show that the domestic monetary policy environment continues to be maintained in a loose direction (supporting economic recovery and growth).

In that context, according to VNDirect experts, smart money will be less "cautious" and gradually return to the market.

*Overnight interest rates on the interbank market have fallen to record lows. Money is cheap again. (Chart: M. Ha)*

The Van Thinh Phat case caused great damage, VN-Index dropped 15 points, bottom-fishing demand increased. Bottom -fishing demand increased after selling pressure at the beginning of the new week's session. Many stocks no longer fell sharply as the signal of the ATO periodic order matching session. The Van Thinh Phat news is said to have had a significant impact on investors' psychology.

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