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Shares of Vietnamese aviation firms fell sharply. Photo: Internet.

Aviation and pharmaceutical shares

At the end of the session on 31 January, the VN-Index continued to lose 22.96 points to end at936.62 points. A series of major stocks continued to be sold,such as HVN, HCM, DPM, PVD, VJC, and VNM.

Trading of foreign investors on January 31 on HoSE was less negative with only VND 22.7 billion net sold, equivalent to net selling volume of 511,590 shares.

Thus, in the first two sessions, the total net selling of foreign investors was VND 207 billion.

Notably, amid the panic caused bycoronavirus, the aviation industry washeavily affected. At the end of the session on January 31, shares of Vietnamese aviation firms such asVietnam Airlines, Vietjet Air or ACV continued to drop significantly.

Specifically, the stock price of Vietnam Airlines (HVN) declined VND 2,100 to VND 28,450. With the stock declining by 6.87 percent, the market capitalization of Vietnam Airlines has lost about VND 2,600 billion.

Thus, after the first two sessions after the Lunar New Year, the stock of Vietnam Airlines has dropped nearly 13 percent.

On January 31, the stock price of VJC decreased sharply by VND 9,800, equivalent to 7 percent.

With the sharp price decrease, Vietjet Air’smarket capitalization lost more than VND 5,000 billion on January 31. Accumulated in the last two sessions, it lost nearly VND 9,000 billion.

The reason for the sharp decrease in stocks of these airlines was due to the coronavirus outbreak in China. This is a key market of airlines in Northeast Asia. Almost all newly opened routes of the two airlines connect tourist cities of Vietnam to major cities inChina.

While the stock market plummeted with large-cap stocks declining and the fears overthe coronavirus epidemic, the price of many stock codes continuously hit the ceiling.

CDP shares of Codupha Central Pharmaceutical increased from VND 7,900 per share to VND 9,000 per share. This is the the second consecutive ceiling increase of this share after the first two sessions of 2020.

The two shares on HNX that are DHT of Ha Tay Pharmaceutical Joint Stock Company and DNM of Danameco increased by 9.9 percent to VND 53,500/share and VND 10,000/share, of which DHT saw the highest liquidity sinceMarch 2019.

JVC shares of Vietnam Japan Medical Equipment has also increased to VND 3,470/share. DHG shares of DHG Pharmaceutical Joint-Stock and IMP shares of Imexpharm also recorded ceiling gains.

Ending the session, DMC shares of Domesco Medical Import–Export Joint Stock Corp increased by 6.4 percent to VND 76,000/share. DBD shares of Binh Dinh Pharmaceutical and Medical Equipment Joint Stock Company and DCL shares of Cuu Long Pharmaceutical Joint Stock Company increased 4.5 percent and 0.6 percent.

In the trading session on January 30, pharmaceutical stocks were also traded strongly. CDP, HDP, JVC hit the ceiling and DHG, DNM, DCL, IMPand closed in the green.

Do not buy gainers due to psychological effects

According to Bao Viet Securities Company (BVSC), the VN-Index is moving badly in the medium-term trend after penetrating the important support area of 945-946 points. The correcting pressure of the market will likely continue in the short term and if it is unable to hold the threshold of 936 points in the next session, it is likely that the index will continue dropping to test the support level of 910-920 points.

In the scenario that the market shows a technical recovery at the current point level, the index will return to challenge 945-946 points.

Regarding investment strategy, BVSC recommends investors reduce the proportion of stocks in the portfolio to a low level of 10-20 percent of stocks. Investors holding stocks with a large proportion can take advantage of the market recovery to sell off the proportion.

“We have a negative view on the market trend in the near future when the important support area of 945-946 points is broken. Thus, investors should temporarily stand outside the market to wait for the reaction of the index when retesting the recently broken point,”BVSC said.

For pharmaceutical stocks sharply increasing, experts said that the motivation for the increase of these stocks does not stem from business activities but only a short-term psychological effect due to the influence of the coronavirus epidemic. While there is currently no medicine to treat pneumonia caused by this virus infection.

In fact, after each force majeure incident, there were stocks that increase due to psychological effects such as industrial groups benefiting from the trade war and petro stocks fluctuating after US-Iran tensions.

However, after the increase, if the upward momentum did not come from the core business, the stock price would plunge rapidly. Therefore, investors need to consider carefully when deciding to invest, especially to buy at high price area to avoid unnecessary damage.