Local stocks projected to extend gains this week

Monday, Jan 25, 2016 08:10

The benchmark VN Index on the HCM Stock Exchange inched up 0.1 per cent on Friday to finish at 522.24 points. — VNS Photo Gia Vi
HA NOI (Biz Hub) — Vietnamese shares could see gains this week on expectations they have become attractive to investors after recent declines, brokerage firms wrote in their weekly forecasts.

Brokerage firms, such as Sai Gon-Ha Noi Securities Corporation (SHS) and Maritime Securities Incorporation (MSI), said global markets showed signs of recovery after the European Central Bank (ECB) maintained its interest rates and promised to launch stimulus packages in March, as well as global oil prices rebounding strongly.

The information helped Asian stocks rise strongly, as investor confidence improved, having positive impacts on Vietnamese stocks.

However, investors should be careful, as these gains could be unsustainable, brokerage firms said, adding that they should pay attention to how China's regulatory bodies cope with the slowdown of the country's economy and watch global oil prices closely, which are expected to rise above US$34 per barrel to prove their recent gains were not temporary.

Further, Vietnamese shares extended their losing streaks last week. The benchmark VN Index on the HCM Stock Exchange inched up 0.1 per cent on Friday to finish at 522.24 points, however, it fell 3.8 per cent from the previous week. The southern index has dropped 9.8 per cent since the end of last year.

Meanwhile, the HNX Index on the Ha Noi Stock Exchange gained 1.1 per cent on Friday to end at 73.85 points, though it lost 2 per cent last week. Additionally, the northern index has declined 7.6 per cent since the end of last year.

Investor confidence remained low during most trading sessions last week amid fears about the continuing slowdown of the Chinese economy and plunging crude prices.

Low investor confidence pressured bank stocks, such as Vietcombank (VCB) which fell 2.6 per cent after a week, Vietinbank (CTG), which slipped 8.5 per cent, and the Bank for Investment and Development of Viet Nam (BID), which slumped 15.7 per cent.

BID also fell, as investors worried about an announcement that the bank temporarily cut its housing loans.

Other large-cap stocks that suffered from low investor confidence included dairy firm Vinamilk (VNM), which plunged 5 per cent, software provider FPT Corporation (FPT), which dropped 2.8 per cent, and agricultural company Hoang Anh Gia Lai JSC (HAG), which slid 20 per cent on negative rumours about the company's business.

In addition, energy stocks fell as crude prices touched twelve-year lows on Wednesday. However, they recovered during the week's two final sessions due to rebounding crude prices.

US benchmark crude West Texas Intermediate (WTI) slipped 9.8 per cent to $26.55 a barrel, then rose sharply 21 per cent to close the week trading at $32.19 a barrel. London-traded Brent crude dropped 3.7 per cent to $27.88 a barrel, but gained 15.4 per cent to close at $32.18 a barrel.

Among energy stocks, PetroVietnam Gas Corporation (GAS) lost 6.7 per cent last week, PetroVietnam Drilling and Well Services Corporation (PVD) fell 12 per cent, and PetroVietnam Technical Services Corporation (PVS) slid 10.3 per cent.

In addition, investors in Viet Nam can look to company reports on last year's business performances. Last week, listed brokerage firms, such as Saigon Securities Incorporation (SSI) and HCM City Securities Corporation (HCM), reportedly earned profits during last year, and those results helped the brokerage sector index jump on Friday.

Additionally, market trading liquidity rose after a week as investors sought stocks that fell to attractive price ranges. The markets traded more than 194 million shares each session, worth VND2.4 trillion ($108 million), an increase of 15.5 per cent in trading volume, and an increase of 11 per cent in trading value from the previous week. — VNS

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