The sell-off by margin traders that has sent the HCM City Stock Exchange plummeting in recent weeks eased last week, carrying the VN-Index to a close on Friday of 443.34 points, a net loss on the week of just 0.82 per cent.
Average daily volume also grew by 5.7 percent over the previous week to just over 37 million shares, worth a daily average of VND1.32 trillion (US$71.1 million).
On the Ha Noi Stock Exchange, the HNX-Index managed a net gain of 2.34 percent on the week, ending Friday’s session at 143.26 points. But the average daily value actually fell by over 15 percent from the previous week to just VND428 billion ($23.1 million), on an average daily volume of 16.27 million shares.
"Last week didn’t see anymore share-dumping, suggesting that investor sentiment is stabilising," said FPT Securities Company analyst Nguyen Quang Vinh.
Many stocks had fallen below their book values, persuading some investors to return to buying, Vinh added. "Share prices have reached a profitable level after a bear period," he said, predicting that the VN-Index in the coming week would range between 430 and 460.
Fiachra MacCana, head of research for HCM City Securities Co, said in report on Friday that technical selling pressures on the market had already peaked and indicators such as long-term moving averages were showing that the market had reached key support levels.
The average price-to-earnings ratio stood at less than 11.5 on Friday, suggesting that stocks had become cheap again and would start attracting buyers, MacCana said.
Nevertheless, John Nolan, an analyst with a HCM City-based fund management company, believed that the pressure on many investors to repay loans secured by stocks would continue to hinder trading.
Commercial banks had been forced to restrain additional lending for securities trading, barring investors from taking advantage of leverage, a tool that allowed many to "triple their greediness," Nolan said.
Many investors had begun sitting out the market, waiting on the resumed availability of credit next year, he added, although the market could become burdened by supply in the meantime, with a number of new and additional listings hitting the market.
Alan Pham, Chief Economist of Vina Securities Company, wrote in a report that investors overreacted to recent central bank policy decisions. "The new policy steps will eventually be beneficial for the economy and, thereby, for the markets," Pham wrote.
Pham also said that restrictions on leverage would also have long-term benefits, forcing investors to buy with their own money, not leveraged capital.
He recommended that investors interested in buying now should favour oil and gas, raw materials and industrial shares.
According to data from Vincom Securities Company, foreign investors last week were net sellers on both stock exchanges, selling off 3.24 million shares for a net value of VND31.7 billion ($1.7 million).
Ngo Thanh Phat of the Viet Nam International Securities Company said that more opportunities had been given to ‘value’ investors and foreign investors had taken advantage of them.
"They would not disburse capital if our economy were getting worse," Phat said. "Therefore, local investors should change their minds now."
Vinh recommended investors put 40 percent of their capital into shares, concentrating on those that have fallen below their book value and have strong business performance.