Cash notes placed on a counter at VNDirect Securities Corp's trading house in Ha Noi. The stock broker is among the four large-cap securities firms that posted lower earnings for the second quarter of the year. — Photo tinnhanhchungkhoan.vn

Vietnamese shares made slight gains last week and the benchmark local index is expected to consolidate under the 1,000 point level before advancing, analysts say.

Investors are looking towards the upcoming Federal Reserve (Fed) meeting while also preparing to offload assets and dodge potential risks, they say.

Viet Nam’s benchmark VN-Index on the Ho Chi Minh Stock Exchange ended last week at 993.35 points, up 1.1 per cent from the previous week. The prior week, the index gained 0.71 per cent.

Though the index advanced more last week than the week before, it was clearly slowing down compared to the period between June 27 and July 15, when it gained a total of 3.12 per cent.

Since July 15, the VN-Index has gained a total of 2.14 per cent.

According to analysts, the benchmark index has been progressing at a slower rate because investors are taking a cautious stance ahead of key international events this weeks.

On July 31, the Fed will hold a meeting in which it is expected to deliver an interest rate cut that will support the global economy.

An interest rate reduction will help boost the flow of foreign capital, both direct and indirect, to emerging and frontier markets including Viet Nam.

However, global investors are betting the Fed will cut its rate by only a quarter of a point to the range of 2-2.25 per cent, which may disappoint the markets as the previous expected cut was half a point.

The world’s attention will also be drawn to the trade talks between the US and China to resolve their ongoing trade dispute, which has unsettled global financial markets over the last year and a half.

Global markets would remain unstable as investors wait to learn the outcome of the talks, Le Duc Khanh, director of market strategy department at PetroVietnam Securities, told tinnhanhchungkhoan.vn.

Investors may be disappointed, he warned, because the two sides seem unwilling to back down.

Meanwhile, the second-quarter earnings season has nearly reached the saturation stage with almost all large-cap companies having announced their results. Therefore, Khanh said, the market may lose the support provided by the earnings numbers.

“It’s no surprise the VN-Index will go up and down around the 1,000 point level,” he said.

Expectations for higher corporate earnings have pushed the VN-Index up strongly since the end of June, but the earnings results have been mixed.

The banking sector has been the bright spot in the second-quarter earnings season. Vietcombank (VCB), TPBank (TPB), Techcombank (TCB), Asia Commercial Bank (ACB) and Military Bank (MBB) made higher profits in the second quarter and in the first six months of the year.

But other sectors considered leading industries for the Vietnamese stock market like securities, oil and gas, and real estate have been reporting lower results for the past quarter.

For example, the four largest stock-brokerages SSI Securities Inc (SSI), HCM City Securities Corp (HCM), Viet Capital Securities (VCI) and VNDirect Securities Corp (VND) all announced that their profits dropped in the second quarter from last year.

The results were attributed to low market liquidity in the first six months of the year, dampening their earnings from brokerage and proprietary trading activities.

To some extent, corporate earnings have had a negative effect on investor confidence and the recent gains were only short lived, said Pham Duc Hoang, director of market analysis at Agribank Securities Co.

In its latest weekly report, BIDV Securities Corp (BSC) said 497 companies or 66 per cent of the total have released their earnings reports.

The total results were only 6.8 per cent higher year on year at VND21.2 trillion (US$912.7 million), with Vietcombank accounting for a large portion (6.75 per cent of the figure), BSC said.

Thirty-five per cent of the firms that have reported recorded higher growth while 9 per cent posted losses in the second quarter.

Hoang and Khanh pointed out that the VN-Index might need a break in the short term to strengthen its current position ahead of key international events.

The 1,000 point level remained a challenge for the VN-Index and it might correct by 5-10 per cent in the next few weeks as the earnings season effect fades away, Khanh said. — VNS