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Stock Market Comment   2009-06-10 - TN

“No retreat is in sight for the rallying VN-Index as huge cash flows keep pouring into the stock market."

Domestic investors have been major buyers recently. At present, they are in a buying frenzy, but also ready for a quick escape.

This is the first indicator that the stock market’s rallying trend is unstable.

Another sign is that after an economic crisis, international markets go through restructuring as failed companies fall by the wayside.

Such changes aren’t obvious in Vietnam with companies on the verge of bankruptcy not opting to go out.

Finally, many listed firms will post hefty rises in their earnings reports during the market rally only because they will be repaid the statutory provision maintained for losses on their investment portfolio.

So I don’t think the market’s current streak is a healthy performance.

Nguyen Hong Nam, deputy general director of the Saigon Securities Inc.

The local stock market has been too hot and the capital flow has been continuous. The number of people opening brokerage accounts is increasing.

Sometimes I think the market now looks like a casino. We all see that local investors are very excited. Everyone is taking advantage of the rally, and no one wants to overlook opportunities to participate in the market.

A herd mentality is the main driver of the market now and many people are buying or selling without paying attention to either the fundamentals or technical analysis of the stocks.

I think the Index will reach 550 this week, but it will face corrections when it reaches 520 or 530.

Hoang Xuan Quyen, vice general director at Hanoi-based Tan Viet Securities Inc.

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