The recent decline in stock trading could mean that speculators are withdrawing from the market, leaving more room for long-term investors to buy, analysts said.
Since last month the average daily trading on Vietnam’s stock bourses have dropped to around VND16 trillion ($690.70 million), down 61.5 percent from the first quarter.
Trading declined for the sixth session in a row to VND12.46 trillion on Friday, before increasing 7 percent to VND13.33 trillion on Monday.
Le Chi Phuc, CEO of investment fund SGI Capital, said at a recent forum that many new investors who had only been trading for several months had left the market due to lack of knowledge and experience.
This means there are more room for long-term investors and organizations to buy, he added.
Analysts of RongViet Securities Corporation said in a note that in the last two years, Vietnam’s stocks have been surging thanks to "easy" money, referring to speculators’ investment in stocks that rise and fall rapidly.
But starting this year, only stocks with real value, shown by the company’s profit growth and increased capital, can continue to rise, with some winning sectors including fishery, logistics, technology and retail, they added.
Analysts of Vietcombank Securities shared the same view, adding that investment could return to big-cap stocks in the second quarter.
Le Anh Tuan, director of strategic investment at Dragon Capital Vietnam, said that the decline in trade is often seen in a falling market.
But there is often little connection between Vietnam’s stock market and its economy, as seen in 2020 when the stock market still grew despite low gross domestic product growth, he added.
Most analysts remain positive about the market this year.
SGI forecast that listed companies could see their combined profit rising by 20-25 percent from last year.
Some companies have made ambitious three- to five-year plans with a growth target of 30 percent, it said.
As of April, 529 companies have released their earnings figures, and their combined revenue increased by 31.5 percent year-on-year while profit went up 68 percent year-on-year, according to a report by brokerage VNDirect.
These positive figures will be the main drivers for growth in the market, it said.
But it warned that prolonged Russia-Ukraine tensions and lockdowns in China could cause more concerns about global supply chains.
The tightened policy of the U.S. Federal Reserves might also pose challenges to economic recovery, it added.
La Giang Trung, CEO of Passion Investment, said that now might not be the best time to buy as there could be more corrections after a long time of VN-Index hitting new peaks.
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