Shares are forecasted to extend a rally this week. However, experts expect a slower pace of growth, as profit-taking selling pressure increases as the benchmark VN-Index continuously touches new nine-year highs.
The VN-Index has recorded five consecutive gaining weeks on the HCM Stock Exchange, expanding 1.31 per cent last week and closing Friday at 743.41 points.
The southern market index has increased 3.6 per cent this month and nearly 12 per cent since the beginning of this year.
On the Ha Noi Stock Exchange, the HNX-Index gained 1.64 per cent for the week, ending Friday at 93.69 points. The northern market index has climbed 17 per cent this year.
Money heavily flowed in the two markets, with a total of 303.6 million shares averaging over VND5.8 trillion (US$255.5 million) traded in the two markets in a single session. These figures represented increases of 74.6 per cent in volume and 100 per cent in value compared to the previous week’s levels.
Large-cap stocks, particularly banks, led the market rise following the information that the Government has submitted a new resolution on bad debts to the National Assembly. If approved, the resolution will ease bottlenecks and speed up the process of settling bad debts in credit institutions.
Price of BIDV shares (BID) leapt 13.4 per cent last week, while Military Bank (MBB) and Eximbank (EIB) shares increased 9.6 per cent and 5.4 per cent, respectively.
Though admitting the new resolution is a positive factor for bank stocks, Nguyen Ngoc Lan, head of the brokerage at Agribank Securities JSC, forecasts that bank stocks will likely stay in neutral position this week.
“It should be noted that bad debt restructuring is a time-consuming and difficult period, involving many economic subjects. Therefore, it takes a long time for the new policy to translate into business results for banks,” Lan told the website tinnhanhchungkhoan.vn.
She predicted that prices of bank shares would move around the current level with alternative up/down sessions.
Lan said cash inflows remain strong but the growth speed will likely slow down this week, as positive information has been reflected in the share prices.
“The VN-Index may maintain its upward trend in the first week of June before facing a correction period in the following week,” Lan said and noted money could flow in large-cap stocks, which have not increased much in the past period.
According to Nguyen Viet Duc, a market strategist at MB Securities Co, foreign buyers will continue to support the market in the coming time.
Foreign investors were responsible for total net buy value of VND607 billion on the two exchanges last week, a rise of 110 per cent over the previous week’s figure.
Duc said foreign investors have constantly collected local shares, making bets on strong economic performance of Viet Nam. Both two ratings agencies, Moody’s Corporation and Fitch Group, upgraded their views on Viet Nam’s prospect to positive.
Meanwhile, in mid-June, Viet Nam’s stock market will likely be considered to enter the MSCI’s watchlist to be upgraded to an emerging market status.
“It is very important to have foreign investors’ confidence in the local market, because Viet Nam’s P/E (Price- Earnings) ratio is no longer cheap and is still able to grow thanks to strong GDP growth compared to other regional countries,” Duc said.
He suggested that investors pay attention to the shares which could be added to portfolios of exchange-traded funds in their June’s reviews, including petrol retailer Petrolimex (PLX), Sai Gon Thuong Tin Real Estate (SCR), Kinh Bac City Development (KBC) and Hoa Binh Construction and Real Estate (HBC).
Several securities companies have predicted that the VN-Index will move around 747-750 points. – VNS