A sad stock year

Stock market experts predict that the downward trend will continue in the remaining days of December and the VN-Index will be below 600 points by the end of this year.

The stock market in the closing month of 2015 is "in chaos" with many worries. In early December, the VN-Index had many violent fluctuations, many consecutive sessions dropped 8-10 points, then recovered. At the peak of the trading session on December 9, the VN-Index fell nearly 9 points to 565 points, down 73 points compared to July 14 when the VN-Index reached 638 points thanks to positive information about the expansion of foreign room.

Regarding foreign investors, foreign investors are massively selling a large amount of stocks on HOSE. In just the first 7 trading sessions of December, foreign investors sold over 8.3 million shares worth over VND2,006 billion. Thus, investors have continuously sold net stocks worth VND824 billion. The net selling trend is increasing strongly, with foreign investors net selling up to VND300 billion in one session.

The downtrend will continue through the end of 2015.

Previously, in November, foreign investors also net sold nearly 500 billion VND. The massive net selling by foreign investors caused the VN-Index to fluctuate with a strong amplitude, with some sessions falling by 9-10 points. On the HNX, the net selling volume was insignificant, only at 25 billion VND.

Market liquidity is also always low, trading is sluggish even though cash flow remains in the market. Average liquidity only reaches 1,500 billion VND per session.

The amount of securities margin is estimated to be at a high level. BIDV Securities Joint Stock Company (BSC) said that the margin at some large securities companies has now reached VND12,380 billion, 71% higher than the sharp market decline in March 2015. Accordingly, the large margin has created pressure causing the market to continuously decline. The margin balance reflects that the risk is still very high in December.

The market has no good news to support it, the US Federal Reserve (FED) is preparing to hold a meeting on December 15-16 to decide on raising the basic interest rate, which has a big impact on investor sentiment. According to forecasts from international and domestic experts, the FED will increase the US dollar interest rate from 0.25 to 0.5% this year. It is the psychological pressure from the FED's interest rate hike that has pushed the stock market into an unhappy situation in December.

According to statistics, in December of previous years, the market has been unpredictable and tends to decrease. In 2011, VN-Index decreased by 7.9%; in 2013, it decreased by 0.8% and in 2014, it decreased by 4.1%. Financial experts predict that December will end a rather "sad" year for Vietnamese stocks.

Mr. Tran Hoang Son, Strategy Director of MB Securities Company (MBS), said that in December, the market did not have much supportive information after the ETF fund's last portfolio rotation of the year. In addition, information about the FED meeting to decide whether to raise interest rates or not made investors worried. With the scenario of the FED raising interest rates, foreign investors will withdraw capital from frontier and emerging markets.

"In fact, foreign investors have been net sellers since late November and throughout early December due to concerns about the FED raising interest rates. For domestic investors, high margin puts the market under constant downward pressure. The deep downward trend will continue until the end of the year," Mr. Son commented.

Accordingly, this expert predicts that by the end of 2015, the VN-Index will close below 600 points. However, Mr. Son also believes that the deep market decline is an opportunity for investors to buy cheap stocks to catch the wave in early 2016. At that time, after the long Christmas and New Year holidays, foreign investors will return and the market will stabilize again.

BSC Securities Company also presented two not-so-bright short-term scenarios for the VN-Index, saying that the market will continue to decline in the short term.

In the first scenario, VN-Index may break the nearest support level of 561 points to fall back to a deeper support level of 543 points for the negative scenario. In this case, a margin call will occur, triggering a mass sell-off.

In the second scenario, VN-Index is expected to fall to the support level of 561 points. At that time, investors will reduce the proportion of stocks in the recovery phase because the downtrend will last until the end of the month. This will bring the market back to a state of fluctuating and choppy trading and make it difficult to make a strong breakthrough.

2015 was a year of fluctuations in the stock market with a full range of emotions: joy, sadness, hope and disappointment. At the beginning of 2015, many securities companies predicted that the VN-Index in 2015 would close at 640-650 points. However, due to unpredictable fluctuations in the price of crude oil, exchange rates and the FED's interest rate hike, the stock market did not grow as expected. With the rather negative developments of the market, analysts believe that this year's VN-Index will "miss its appointment" with the threshold of 640-650 points.

According to VNE