Central banks boost VN investor optimism

Monday, Feb 01, 2016 08:06

Investors follow transactions at Saigon Securities Incorporation in Ha Noi. — VNS Photo Doan Tung

HA NOI (Biz Hub) — Vietnamese shares will likely extend their gains this week as investor confidence rises after the world's central banks developed policies to strengthen and improve global financial markets.

This was the forecast sent out by brokerage firms in their reports this week.

The benchmark VN Index on the HCM Stock Exchange rose 1.1 per cent to end Friday at 545.25 points, while the southern index gained 4.4 per cent over the week.

Additionally, the HNX Index on the Ha Noi Stock Exchange increased 0.9 per cent to close at 76.87 points on Friday. The northern index added 4.1 per cent last week.

Confidence among investors is expected to rise after they received positive signals from the world's top central banks, in a bid to stabilise and strengthen global stock markets by issuing policies to support these markets.

Further, the US central bank announced last Wednesday that it would retain its same interest rates, and is expected to hike its rates fewer than four times this year.

Meanwhile, Europe's central bank also maintained its interest rates and signaled it would provide stimulus packages for the eurozone's economy in March.

Also, last Friday Japan's central bank applied negative interest rates and will reduce its rates in order to boost domestic growth and meet this year's expected inflation rate.

Those moves helped reduce Viet Nam's foreign exchange rate with the US dollar, which assisted local companies in attracting foreign purchases last week, especially financial firms, including banks, insurers and brokerage companies, which could improve their dollar-based investments.

Among banks, Vietcombank (VCB) gained 4.5 per cent last week, the Bank for Investment and Development of Viet Nam (BID) jumped 12 per cent, and Vietinbank (CTG) rose 6.8 per cent.

Other banks also recorded positive gains last week, including Sai Gon-Ha Noi Bank (SHB) and Military Bank (MBB), which rose 12.1 and 5.9 per cent, respectively.

Meanwhile, energy stocks are expected to continue recovering this week, as oil prices will likely extend their recovery from the twelve-year lows hit on January 20 after the Organisation of Petroleum Exporting Countries (OPEC) and Russia signaled they would cut production to boost oil prices.

Further, US benchmark crude West Texas Intermediate (WTI) was up 4.4 per cent over one week to close last week's trading at US$33.62 per barrel, while London-traded Brent crude jumped 8 per cent to close at $34.74 per barrel.

WTI's price has surged 26.6 per cent since it hit its twelve-year low on January 20, and the Brent crude price has gained one-fourth from its twelve-year low of $27.88 per barrel.

Local energy stocks made big gains last week. PetroVietnam Gas Corporation (GAS) gained 22.5 per cent, PetroVietnam Coating Corporation (PVB) jumped 23 per cent, and PetroVietnam Drilling and Well Services Corporation (PVD) was up 18 per cent, while Petroleum Equipment Assembly and Metal Structure JSC (PXS) increased 19 per cent.

In addition, local markets may be strengthened by companies that complete their reports on last year's business performances. For example, PetroVietnam Ca Mau Fertiliser JSC (DCM) has reported a net profit of VND755 billion ($33.5 million) for 2015, an increase of 18 per cent over last year.

Investor confidence may also boost daily market liquidity, which totaled 178 million shares in trading volume, a decrease of 8.2 per cent from the previous week, and VND2.4 trillion ($106.4 million) in trading value, equal to the previous week's daily trading value. — VNS

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