Appeal evaporates for oil, gas stocks

Analysts reckoned that selling pressure for these stocks would increase following the Organization of Petroleum Exporting Countries (OPEC)'s decision to maintain oil production despite declining prices. — Photo f319.com

HA NOI (Biz Hub) — Oil and gas stocks have lost their shine given steep falls in global oil prices in November.

These stocks dropped nearly 20 per cent in value last month while the benchmark VN-Index declined less than 6 per cent and the HNX-Index fell just 0.7 per cent, according to a Viet Dragon Securities Corporation (VDSC) report.

After OPEC's decision, the oil price retreated below the psychological level of $70 per barrel. In November, oil prices plunged around 18 per cent, according to Bloomberg.

The value of PV Gas (GAS), the biggest stock in term of market value, also plummeted from VND 106,000 (US$4.98) to VND86,000 ($4.04). In just one month, GAS's market capitalisation evaporated nearly VND38 trillion to VND163 trillion ($7.7 billion).

Market value of PetroVietnam Drilling and Wells Service Corporation (PVD) also decreased VND5.6 trillion ($263 million) and that of PetroVietnam Technical Services Corporation (PVS) fell VND3.4 trillion ($159.6 million) as of November 30.

"Very few investors could imagine this scenario, as oil and gas stocks were considered the investment trend of 2014," analysts at VDSC said.

Foreign investors also opted to sell off these stocks, selling VND281 billion ($13.2 million) worth of PVD shares in seven consecutive sessions. GAS stocks were sold for 10 days in a row with a total value of VND200 billion ($9.4 million).

The price of oil and gas stocks improved early this month. However, in the short and medium term, these stocks are no longer attractive given the sharp declines in oil prices, according to Phan Dung Khanh, head of analysis for KimEng Securities Co.

Investment is shifting to businesses that are benefiting from low oil prices such as transport, shipping, steel and plastic, Khanh said. — VNS