Investors at VNDirect Securities Corporation. Photo tinnhanhchungkhoan.vn

HÀ NỘI — After the third-quarter earnings season ends, the Vietnamese stock market may face a correction phase in November as investors try to realise their profits amid expected global market volatility due to the US presidential election.

Việt Nam’s benchmark VN-Index on the Hồ Chí Minh Stock Exchange fell a total of 3.72 per cent last week as it was hit by a market-wide sell-off last Wednesday.

The VN-Index last Wednesday posted its biggest loss in three months as it plunged 2.69 per cent or more than 25 points.

Some securities companies blamed the ninth storm of the year for the sell-off as investors worried about its impact on the country’s economic growth in the remaining months of the year.

For some analysts, the storm was just an excuse for investors to escape from local stocks, especially after the market had made impressive rallies from rock bottom in late July.

The VN-Index lost as much as 33.4 per cent in two months to hit a four-year low of 660 points in late March after the first COVID-19 infections were reported.

After that, the local market was among the best-performing markets in the world.

But the market rally was interrupted in late July after the second wave of coronavirus was reported in central Việt Nam and the VN-Index again nosedived on worries about another nationwide lockdown.

But thanks to the efforts of the Government, provincial authorities and Vietnamese people, a lockdown was averted.

From a low of 785.17 points, the VN-Index had gained as much as 22.4 per cent in almost three months to reach its highest level of 961.26 points on October 23.

“After the hot recovery phase, in which the VN-Index recorded a three-month gain of more than 20 per cent to be among the world’s best-performing markets, now the profit-taking pressure is mounting,” Đinh Quang Hinh, VNDirect Securities’ head of macroeconomics and market strategy, told Việt Nam News.

“Foreign investors have net-sold a total of VNĐ8.5 trillion worth of local assets in the last 26 trading days. Plus, the global markets have been shaking in recent weeks ahead of the US presidential election,” Hinh said.

“The effects of the US presidential election may take a toll on the global financial markets, thus the local market sentiment may turn negative and the market decline may speed up.”

“The market could extend its losing streak in the first weeks of November on higher selling pressure, the risks on the global markets, led by the US presidential election, and the possibility of the second lockdown in Europe,” Hinh added.

American people will have to choose between the current president Donald Trump and his rival Joe Biden to be the next US president on November 4 (Hà Nội time).

Meanwhile, European governments are facing a tough situation in which they have to decide whether to impose second lockdowns to prevent the spread of the coronavirus. Last week, France was among the first countries to make the decision, while the UK did so on Saturday.

The total number of virus infection cases worldwide as of 3pm on Sunday was up nearly 39,000 to more than 46.4 million, according to Worldometer. The US still topped the chart, followed by India, Brazil, Russia, France and Spain.

In Việt Nam, the earnings season is nearly over and the market is entering a stage of information shortage.

“Q3 business results no longer impact the market movement,” Bảo Việt Securities Co (BVSC) said in its weekly report.

According to BIDV Securities Corp (BSC), 587 companies, or 77 per cent of all firms listed on the Vietnamese market, announced total post-tax profit rose 13.5 per cent year-on-year. In the large-cap basket VN30, 29 of the 30 largest listed firms by market value and trading liquidity reported post-tax profits increased by 22.8 per cent year-on-year.

"The VN-Index is still expected to receive support from 895-910 points next week with positive movement during early sessions," Bảo Việt Securities Co (BVSC) wrote in its weekly report.

However, “market rallies (if any) will be bull traps and the correction may last one-two weeks for stocks to settle at new price levels,” the company said.

Analyst Hinh said the market outlook remains negative for the first weeks of November and the VN-Index may fall back to 880-910 points in this period.

But the market may climb back to 930-960 points at the end of the year on the positive outlook of the economic growth and corporate earnings in the last quarter, he said. — VNS