Vietnam stock market may have bottomed

For the past few days, we have become quite accustomed to seeing continuous losses suffered by stock markets throughout the world (including our market). One market has however been rising over the past 2 months & it has even broken above its medium-term downtrend line a few days ago. That market is the Vietnam stock market. Once a top performer among the Emerging Markets (or, was it the Frontier Markets?), the VN-Index (of the Ho Chi Minh Stock Exchange) dropped from its high of about 1100 in October 2007 to a low of about 360 in June this year. On last Monday (August 11th), the VN-Index broke above its downtrend line at the 410 level. Yesterday, it broke above its strong horizontal resistance of 500. The Vietnam stock market has been enjoying steady buying from foreign funds (go here) & the Vietnamese authority is confident enough that it has increased the trading band for transactions on the Ho Chi Minh Stock Exchange to +/-5 percent from the previous +/-3 percent, while that on the Hanoi Securities Trading Centre was widened to +/-7 percent from +/-4 percent yesterday (go here).


Chart: VN-Index's daily chart as at August 18th (source: Bloomberg)

The recovery in the Vietnam stock market is an indication that some markets had dropped so sharply that foreign funds' buying may have started. They must have found the Vietnamese stocks to be too cheap to resist. The same may apply to some stocks in our market, if we have the patient to slowly sift them out.