Vietnam Financial Market - Local investors remain super cautious

Last week I was privileged to be in Ho Chi Minh City by invitation, to conduct a stock market seminar. Since I was there for only three days I can hardly represent myself as an expert on Vietnam’s markets and economic condition.

I can comment, however, on what I see in price charts and what the word is ‘on the street’.

CHARTS
The HOSE Index (Ho Chi Minh City’s Stock Exchange) lost 64% of it’s value from the high of March 12/07 (1179.32) to the low of June 20/08 (364.32). Since June 20th it has gained 42% off it’s lows. That’s impressive, but it is still less than 20% of what it previously lost.

A key area to watch, to gauge the strength of the recovery, is the Resistance area around 550. A strong upside break of that area, and especially of 625., will imply a longer range rally that should at least target 750., and then 850.

THE STREET
Local investors remain super cautious about the stock market. Many were badly burned in the huge sell-off and haven’t yet worked up the courage or conviction to return. My personal view is that local investors are, as a whole, fairly inexperienced in the markets. If they had more knowledge of market structure and some advanced techniques of technical analysis, they would not have been buying, or holding, when the market was selling off.

A select few stocks have risen quite dramatically, beating the Index, however most of the rise has occurred with volume hardly registering on the volume indicator, and that hardly instills confidence in the upmoves. Brokerage firms report over all volume is down by 50%. Everyone is hoping desperately for a little good news.

My advice – Watch the charts! We’ll know good news when we see it!


Daily Bietnam Stock Exchange Index chart as at 21 August 2008, using NextVIEW Advisor

Technical Information on the HOSE Index:

Nearby resistance is between 550. – to 625. (R1)
Near by support - 427.25 (S1)
Second support – 360.00 (S2)

Analysis and Commentary by Don Schellenberg