Local stocks likely to decline on profit-taking

Monday, Feb 29, 2016 08:09

Vietnamese shares made gains at the end of Friday's trading session on both local exchanges to extend their rallies for a second week. — VNS Photo Gia Vi

HA NOI (Biz Hub) — Vietnamese shares might fluctuate and decline this week following rallies during the last two weeks, as investors might lock in profits after the markets resumed from Tet holiday, brokerage firms wrote in their weekly forecasts.

Vietnamese shares made gains at the end of Friday's trading session on both local exchanges to extend their rallies for a second week.

The benchmark VN Index on the HCM Stock Exchange rose 0.6 per cent on Friday to end last week at 566.11 points. Meanwhile, the southern market index gained 2.2 per cent last week and 3.9 per cent since the markets reopened after the Tet holiday.

Further, the HNX Index on the Ha Noi Stock Exchange added 0.7 per cent to end last week at 79.06 points, while the northern index increased 1.6 per cent from the previous week and 2.8 per cent since the Tet holiday ended.

Investors may seek profits in banks and brokerage stocks, which made big gains last week, especially as global markets were concerned over the continuing slowdown of China's economy, which may force China to weaken its currency in order to boost local production and protect local products on international markets.

Last week, the reference mid-point rate for Viet Nam's exchange trading band was nearly unchanged at VND21,899 per US dollar, compared to the previous week's VND21,900. Banks that saw rallies last week included Vietcombank (VCB), the Bank for Investment and Development of Viet Nam (BID), and Vietinbank (CTG). These stocks rose 4.7 per cent, 12 per cent and 6.4 per cent, respectively.

Brokerage firms that advanced last week to help boost the markets included Sai Gon Securities Incorporation (SSI), which added 6.1 per cent, HCM City Securities Corporation (HCM), which surged 17 per cent, and VNDirect Securities Corporation (VND), which gained 3.5 per cent.

Investors will eye developments in global oil prices after crude exporters, such as Russia and members of the Organisation of Petroleum Exporting Countries, along with Venezuela and Saudi Arabia, expressed their willingness to set up a meeting in March to discuss and bring a production freeze into effect. They also expect other OPEC members, such as Iran and Iraq, to participate in the agreement in an attempt to stabilise and boost prices.

However, US benchmark crude West Texas Intermediate (WTI) fell 0.9 per cent on Friday to close last week's trading at $32.78 a barrel, though it jumped 11 per cent last week and has rocketed 25 per cent since its twelve-year low of $26.21, hit earlier this month.

London-traded Brent crude lost 0.5 per cent to close at $35.10 per barrel. Brent crude was very volatile last week, yet still posted a gain of 6.3 per cent from the previous week and a jump of 17 per cent from its one-month low of $30.06, hit earlier this month. However, analysts are pessimistic about big jumps in oil prices, as an agreement on a production freeze between OPEC and non-OPEC members, provisionally made during the previous week, could be completed, even as Iran attempts to reach its pre-sanction export levels and US crude stockpiles remain high.

Still, local energy stocks were mixed last week. PetroVietnam Gas Corporation (GAS) remained unchanged from the previous week, PetroVietnam Drilling and Well Service Corporation (PVD) was down 0.8 per cent, and PetroVietnam Technical Service Corporation (PVS) rose 1.3 per cent.

Also last week, both local bourses traded nearly 200 million shares each, worth VND3.35 trillion ($149 million), an increase of one-fifth in trading volume and two-fifths in trading value from the previous week. — VNS

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