Liquidity is drying up, what is happening to the stock market?

October 25, 2023 07:30 Nhat Linh Print article

ANTD.VN - Stock market liquidity on October 24 fell to a record low in nearly half a year. Is this a worrying sign?

In the trading session on October 24, VN-Index reversed and increased by more than 12 points, regaining the 1,100 point mark. Notably, the cash flow was not very enthusiastic about pouring into the market when liquidity on HOSE only reached more than 10,400 billion VND. This is also the common situation in many recent sessions, when the market, whether up or down, the transaction value did not increase dramatically.

In yesterday's session, the market was concentrated mainly on bluechip stocks, especially banks trading in the group of small stocks with very limited trading. The lack of liquidity in recent volatile market sessions has made many people worry that money has left the market.

Lượng giao dịch trên thị trường chứng khoán liên tục suy giảm ảnh 1

Trading volume on the stock market continues to decline.

Yuanta Securities Company believes that short-term market risks show signs of increasing and short-term demand remains low at high prices. Therefore, investors should still be cautious and should not rush to buy new ones at this stage.

In addition, the short-term sentiment indicator has increased, but overall, investor sentiment is still very pessimistic about the current market performance. The short-term trend of the general market remains bearish. Therefore, Yuanta recommends that short-term investors can continue to hold the current stock ratio and continue to observe the market performance in the next session. At the same time, investors should not sell at the current price range.

However, on the other hand, there is also a view that the decrease in liquidity during strong fluctuations is actually not a very negative signal. This shows that the market supply and demand may not be meeting. For those holding stocks, when they have lost too much, the fear gradually passes, investors are bored and no longer want to sell but persistently "bear the loss" waiting for a strong recovery of the market.

Meanwhile, buyers are still waiting for a sell-off. If the situation is stalemate and holders continue to persevere, money may enter the market to avoid missing out on good prices.

Vietnam Construction Securities Joint Stock Company (CSI) believes that the gloomy trading market when liquidity disappears, especially when the market adjusts to around 1,090 points, is not necessarily a negative signal.

Instead, it shows that the selling pressure is gone. Just a small amount of liquidity immediately pushed the VN-Index to reverse and increase quite strongly.

However, in the current context, investors are quite worried about the impact of the decline in major indexes around the world , so the decline in liquidity at the support level is a positive signal for the recovery trend.

Therefore, CSI maintains the view of holding purchased stocks, probing at the support level of 1,080 points and increasing the proportion in the coming sessions, prioritizing opening buying positions when the general market has a correction.

Source link