Vietnam stock indexes have gained new highs recently. However, the rise of large-cap stocks has stalled, while mid-caps are attracting cash flow again after a correction period.
A report found that mid-cap stocks had the highest growth rate in the first six months of 2017, by 33 percent, higher than the 20 percent growth rate of VN30 and the 20 percent of small-cap. However, both small- and mid-cap stocks later experienced a correction period until October and only increased again in November, thus curbing the growth rate in 2017.
By contrast, the VN30 stocks have maintained an upswing since August 2017, becoming an important driving force for the VN Index to overcome the resistance threshold and gain new peaks.
However, commercial retaliatory actions by the world’s two biggest economies, the US and China, have increased the risk in the global stock market, and may weaken the large-cap’s growth motive.
The high sell demand put pressure on large-caps when the VN Index surpassed the 1,200 point threshold. However, this is also a great opportunity for cash to flow to mid-caps and small-caps after taking profit with large-caps.
In a bull market, bluechips always lead the market trend. As the stocks have large capitalization values, the stocks have big impacts on the indexes. So the price increases of the stocks will push the indexes up and bring optimism to investors.
As a result, the cash flow will begin to head for stocks with smaller capitalization values and push the price grounds up.
Analysts all say that the small- and mid-caps have been leveling off over the past six months, so they would bounce back soon.
Analyses show that the mid-cap and small-cap P/E ratio are 13 and 11, respectively, much lower than the VN 30’s P/E. With such a big gap, the cash flow will inevitably head for mid- and small-caps.
The high trading of small- and mid-caps is the major motive maintaining high market liquidity. However, analysts say, the cash flow will be selective and will go to the stocks of companies which expect to have satisfactory business results in the first quarter of 2018.
Some real estate stocks have seen prices escalating significantly in recent months as the land price continues to rise. The CEO Group share price has exceeded the resistance area of VND11,000 per share and soared to VND16,000. The upward trend only began in late March, which means that the price soared by 50 percent within a month.
The price of Kinh Bac Urban Development (KBC) has also increased since early April, now hovering around VND13,000 per share.