1. What Expectation For Stock Market In Short Term?
Stock almost remained stable in March. In April, Vietnam stock began with
a session but dropped slightly.
That market has fluctuated with small amplitude and low liquidity in recent
times shows many investors believe this is the bottom of the market occurring
when the price of stocks are low and sellers no longer want to sell at lower price
again. On a technical analysis perspective, the market tends to accumulate and
hardly have the probability of a low decrease. However, it is unlikely for the
possibility of short term breakthroughs in index since demand is low due to
certain market trouble.
Gasoline increase has great impact on inflation and manufacturing situation
of some profession. This increase will make CPI of April go up to 0.4% and CPI
of whole month reach 1% more. In the future, it is hard for gasoline price to go
down since if global price increases, then as “market mechanism”, domestic price
will go high as well. In contrast, if global price falls, export tax for gasoline can
recover. Since, in the recent time, export price is 0% and 40% for maximum,
gasoline decrease for retail is impossible
Worry for inflation causes State Bank to continue tightening monetary
policy in the context of having liquidity stress in banking system, when
previously, on 03/08/2011, State Bank has raised discount rate from 7% to 12%.
On 03/31/2011, State Bank issued Decision No. 692/QD-NHNN, under which
interest rates for refinancing and overnight loans to commercial banks increasing
to 13%. With three times increase in two months, the refinancing interest rate
today only 2% less than their peak of 15% in May 6 / 2008. Banks strained with
the race to raise interest rates for short term and no term limitation up to the
ceiling. There is information showing that real interest rates of some banks have
been up to 17-18% per year due to the implicit cost of capital raising when the
monetary policy is tightened.

2. Furthermore, after a strong move to adjust exchange rates to over 9%, and a
strong reduction on foreign trade showed that investors are worried because of the
instability of macroeconomic policies. With the major contribution to the demand
when they bought in 2010 and early 2011, a decline in activities of foreign
investment will affect the market
Thus, the most positive point in recent time is investors today have not
"interest" in the sale of stocks due to the deep fall and in the low price. The bottom
signal appearance will draw investors to make bottom surfing or investors in
capital would consider the capital increase to hold base shares. But with strong
moves in the promulgation of macroeconomic policies to curb inflation by the
government, it is forecasted that the stock market will continue to stay “unstable"
and walked accumulation process can be extended to few months.
For more information about stock and investment please contact VIPC
Capital Management at ngan.nguyen@vietpartnersplus.com