Staff of MB Securities in Ha Noi look at screens showing market fluctuations. — VNS Photo Truong Vi
Shares are expected to gain this week on the back of strong money inflows but growth will likely focus on stocks with promising second-quarter business results.
With three-days of gains in the last five sessions, the benchmark VN-Index on the HCM Stock Exchange increased more than 1 per cent last week, closing Friday at 769 points.
Meanwhile, the HNX-Index on the Ha Noi Stock Exchange closed Friday’s session almost unchanged compared to the end of the previous week at 98.27 points.
Profit-taking pressure rose on the two exchanges after the US investment firm Morgan Stanley Capital International (MSCI) announced its 2017 market classification review, with Viet Nam’s securities market not included listed for potential reclassification to emerging markets status as investors had anticipated.
In addition, bank stocks which drove gains early in the week declined steeply as investors practised the “buy the rumour, sell the news” strategy after purchasing the shares, expecting the National Assembly to soon pass a bad debt settlement resolution. After official approval on Wednesday, investors increased selling to take short margins.
Big banks were losers, with Vietcombank (VCB), the biggest listed lender by market value, performing worst with a slump of 3.5 per cent for the week. BIDV (BID) and Vietinbank (CTG), two of the three largest banks, decreased slightly.
Investors seemed to misunderstand the resolution by assuming the new regulations will benefit small banks and those with high rates of non-performing loans, market analysts at Vietnam Investment Securities Co (IVS) said.
“The resolution aims to help banks deal with bad debts and thus raise their financial strength. However, we need to look further into the banks’ loan-loss provision and its consequences on their balance sheets in past years,” analysts said, adding that if big banks like Vietcombank can reduce bad debts, its provisions will decrease and the bank will increase profits.
Despite large-cap stocks performing poorly on the weekend, money continued to flow in the two markets and bring opportunities in small- and medium-cap shares.
An average of 193 million shares worth VND5.3 trillion (US$233.5 million) were traded in each session on the two exchanges last week, up 13 per cent in volume and 6 per cent in value compared to the previous week.
Investors tended to shift investments to stocks with sound financial indicators and promising business results in the second quarter, such as sugar makers (Bien Hoa, Lam Son), fertiliser companies (PetroVietnam Ca Mau, Binh Dien), automobile dealers (Hoang Huy Financial Investment Services, Hang Xanh Motors Service) and real estate developers (Sai Gon Thuong Tin Real Estate, Phat Dat Real Estate Development, Hoa Binh Construction Group).
“This trend has not developed strongly but will likely become the main market support soon,” IVS’s analysts wrote in its weekly report.
According to stock analysts at BIDV Securities Co, decreasing margin loans as banks begin to close data by quarter’s-end, unfavourable geopolitical information and weakening of large-cap stocks could hinder growth of the market this week.
“The market needs a short break after a prolonged winning run, accumulating momentum to prepare for the next rally with expected macroeconomic growth and second-quarter business announcement of listed companies,” they wrote in a repot.
The VN-Index has rose 4.2 per cent since early June and has expanded 15.7 per cent compared to the end of 2016.
Foreign traders continued to be net buyers in the local market but their net buy value decreased and remained low at just VND392 billion last week, extending their net buying streak to seven weeks in a row. This trend is forecast to continue this week and support the markets.
However, some analysts have warned about possible rising selling pressure in the last days of the month as investment funds often increase trades to boost their half-year reports. — VNS