TPP stall could impact VN export stocks

Wood producers, including Truong Thanh Furniture (TTF), and seafood exporters such as Hung Vuong Corp (HVG), Vinh Hoan Corp (VHC) and Ben Tre Aquaproduct Import and Export Co (ABT), also advanced strongly. — Photo baotintuc

HA NOI (Biz Hub) — Despite the progress made, the latest talks to secure the Trans Pacific Pact (TPP) have stalled.

Issues pegged as sticking points, such as market access for agricultural goods and patent protections for medicines, were continuing to block the deal after four days of discussions.

This could have a negative impact on Viet Nam's stock market this week, especially on shares of exporting companies.

"There is a considerable risk to shares of exporters in early sessions this week, as investors had high hopes for a successful conclusion of the deal at the end of last week," Tran Duc Anh, analyst from Bao Viet Securities Co., wrote in a report.

Exporting shares gained substantial values on expectations of the signing of the TPP deal. Textile and garment shares rose over 3 per cent, on average, last week, including Thanh Cong Textile Garment Investment Trading (TCM), Mirae (KMR), Garmex Saigon (GMC) and TNG Investment and Trading (TNG).

However, overall performance of the two markets was poor last week with the two indices losing values while liquidity went down. Blue chips were the main drag, as growing momentum of the previous rallies, including banks, securities companies, and oil and gas shares, all declined.

With three falling sessions out of five, the VN-Index on the HCM Stock Exchange lost a cumulative 1.61 per cent to close Friday at 621.06 points, while the VN30, which tracks the top 30 shares by market value and liquidity, was also down 1.61 per cent to end at 647.36 points.

On the Ha Noi Stock Exchange, the HNX-Index edged down by 1.37 per cent during the course of the week, finishing Friday at 85.13 points.

Further, liquidity dropped towards the end of the week, averaging 121.5 million shares worth VND2.37 trillion (US$108.7 million) per session on HCM City's market.

The similar figure was also low on the Ha Noi Stock Exchange, reaching just 43 million shares worth VND540 billion ($24.8 million) per day.

"After failing to overcome the 640 points landmark, trade became less positive when selling pressure rose in the large-cap share group. The optimistic point was that money was channeled into speculative stocks which cushioned the market fall," said analysts of the financial website vietstock.vn.

According to Tran Hoang Son, director of the market strategy division at MB Securities Co, Viet Nam is in a technical correction in the short term period, after rising more than 100 points from a low of 537 points in mid-May.

"The short-term adjustment is well normal and reasonable in the context of the market's rhythm," Son was quoted on tinnhanhchungkhoan.vn.

While blue chips lost momentum and mid-cap and penny shares mainly moved sideways, Son predicted the market would accumulate more valuation in August and the VN-Index would fluctuate between 600 to 640 points.

"At the current stage, information about second-quarter business results could be a supporting factor for the market. However, the second quarter is usually a quiet period for businesses. The market is now depending on performance of blue chips and trading by the foreign sector," said Nguyen Vu Phong, deputy director of SeABank Securities Co.

Phong suggested investors closely watch movements of foreigners this week.

Foreign trades were mixed last week. While they were net sellers in HCM City's exchange, responsible for a net value of VND70 billion ($3.2 million), they remained net buyers in Ha Noi's market, with an increase of nearly VND30 billion ($1.4 million) worth of shares. — VNS