Why do stock prices "increase dramatically"?

At the end of the trading session on June 7, the VN-Index continued to record its 5th consecutive increase when closing at 1,109.54 points, up 1.23 points compared to the previous session; the HNX-Index increased by 1.61 points to 230.33 points; Upcom increased by 0.13 points to 84.56 points.

Notably, liquidity on the HOSE floor exploded when it exceeded 18,000 billion VND with a trading volume of over 1 million shares. If counting all 3 trading floors, liquidity was more than 20,000 billion VND. Many securities stocks continued to increase strongly along with the market, continuing the breakthrough momentum in recent days. In particular, TVS increased by the ceiling of 6.85% to 31,200 VND; AAS increased by 3.57%; TCI increased by 3%; SBS increased by 2.63%...

The VN-Index has increased for 5 consecutive sessions, exceeding 1,100 points. If calculated from the beginning of May until now, this index has increased by more than 74 points, equivalent to an increase of more than 7%. Meanwhile, many securities stocks have increased by 20-40% during the same period, such as SSI increased by about 20% to 25,100 VND; VND increased by 32% to 19,500 VND; TVS increased by 40%; FTS increased by 25%; ORS increased by 30%...

Many stock stocks have recovered 20%-40% in a short time.

Analyzing the factors that help securities stocks recover faster than the general market, Mr. Nguyen Thanh Lam, Director of Research and Analysis, Individual Client Division, Maybank Investment Bank Securities Company, said that with the Government prioritizing promoting economic growth, interest rates have been continuously managed in a downward direction. This has a correlation effect between investment channels in a more beneficial direction for the stock market. The fact that interest rates are expected to continue to decrease will also make investors' capital costs in the market (margin interest) more reasonable, thereby stimulating trading demand again.

"The increase in trading volume and liquidity over the past month is a sustainable improvement because in terms of psychological expectations, if liquidity increases, it will be a favorable business environment for securities companies. The good market growth helps increase profits in the securities trading segment. According to statistics, the securities trading segment contributes up to 40% of revenue for securities companies and with the market increasing by 10%, the companies will benefit significantly," said Mr. Nguyen Thanh Lam.

In the context of improved scores and liquidity, investors expect the business results of securities companies to be positive when revenue from brokerage fees, margin lending, and proprietary trading all increase... Based on the assessment that interest rates will continue to decrease in the last quarters of 2023, the outlook for the market and securities companies is forecasted to continue to improve in the coming time. In addition, when the business results of listed companies improve, the growth in stock prices also contributes to the proprietary trading segment of securities companies.

Mr. Dinh Quang Hinh, Head of Macro and Market Strategy, Analysis Division, VNDirect Securities Corporation (VND), said that the trend of decreasing interest rates will have a positive impact on many industries, of which securities are one of the industries that benefit the most. In an environment of decreasing interest rates, the securities industry benefits from both input (reduced capital costs) and output thanks to improved market liquidity and increased demand for margin when interest rates decrease.

"According to observations, cash flow has shown signs of returning to the market recently, as shown by improved liquidity (transaction value on all three exchanges at times exceeded VND20,000 billion/session) and the number of newly opened securities accounts in May increased sharply. The new cash flow entering the market has helped the VN-Index overcome the strong resistance zone of 1,080-1,100 points," said Mr. Dinh Quang Hinh.

Source: https://nld.com.vn/kinh-te/vi-sao-co-phieu-chung-khoan-tang-soc-20230607173108361.htm