Trade war could cause stock volatility

Monday, Mar 26, 2018 07:33

A share auction held at the Ho Chi Minh Stock Exchange. — VNA/VNS Photo My Phuong

Viet Nam’s benchmark VN Index touched its new all-time high on Thursday but investors aired on the side of caution over fear global stocks would move this week amid a possible global trade war.

The VN Index on the HCM Stock Exchange fell 1.60 per cent or 18.77 points to close at 1,153.59 points, putting an end to its previous nine-session rally of total 4.3 per cent.

The southern exchange index had gained total 1.9 per cent since the beginning of the week to reach its record high of 1,172.36 points on Thursday before narrowing its weekly growth to only 0.3 per cent.

The minor HNX Index on the Ha Noi Stock Exchange dropped 1.62 per cent to end at 131.88 points, totalling a three-day decrease of 2.5 per cent.

The northern market index scored a weekly reduction of 0.9 per cent following the last three falling sessions.

Average trading liquidity in each session showed an improvement compared to the previous week with more than 316.5 million shares in average being traded in each session, worth VND8.43 trillion (US$375 million).

The trading figures last week were up 3.6 per cent in both trading volume and value compared to the previous week.

The benchmark VN Index rose strongly in nine straight trading days to set up its new record score of 1,172.36 points on Thursday, successfully surpassing the previous all-time high of 1,170 points that had remained irreplaceable since 2007.

The strong increase of the benchmark index was fuelled the growth of energy stocks, which rose on positive crude trading.

Brent crude had jumped 6.2 per cent since last Monday to finish last week at $65.88 a barrel on expectations that the US would soon impose new sanctions on Iran, one of the world’s leading oil exporters, boosting hope for further global crude output cut.

Among Vietnamese energy stocks, PetroVietnam Gas (GAS) gained as much as 6.2 per cent while the figures for PetroVietnam Drilling and Well Services (PVD) and petrol dealer Petrolimex (PLX) were 8.9 per cent and 4.7 per cent.

Investor confidence was also supported by a positive GDP forecast for the first quarter of the year, which was seen at 6.3 per cent, and the market sentiment remained calm after the US central bank on late Thursday raised interest rates by 0.25 percentage points.

However, a massive sell-out in the world’s stocks sent the benchmark index down as much as 2.9 per cent on Friday before being recouped by investors’ bottom-fishing to narrow its loss to 1.6 per cent.

The global shake was caused by fears of a trade war between the two biggest economies – the US and China – after the US announced $60-billion tariffs imposed on imports from China and the latter one responded by filing a list of 128 US products that could be taxed.

Such actions raised risks of a possible trade war that “could have enormous impacts on world trade and economic growth,” Bao Viet Securities (BVSC) said in its Friday report, adding that such trade war would have significant influences on the Vietnamese economy and firms especially when Chinese products subjected to high US tariffs may be re-directed to other markets, including Viet Nam.

BVSC forecast that a correct is likely to happen this week for the VN Index as it has jumped and traded around the record high amid negative movement of the world stocks and rising profit-taking pressure clearly.

Thus, local investors and analysts are holding on and waiting for further movement of the world stocks this week as short-term risks are existent alongside with unexpected volatility of the global financial market.

“The VN Index is forecast to move between the range of 1,140-1,180 points this week,” BVSC said.

Broker Nguyen Van Hanh at Sai Gon-Ha Noi Securities Co (SHS) said that the Vietnamese market would suffer from a strong correction this week if the world and US stocks continue to trade negatively.

“We need to be careful as economic and fiscal policies of big economies will have certain impacts on the world economic growth in general and on Viet Nam in particular,” Le Duc Khanh, head of market strategy division at PetroVietnam Securities Inc (PSI), told

Nguyen Trung Du, senior expert at VNDirect Securities Co (VNDS), said that tenses between the US and China regarding their bilateral trade relation is rising and financial markets are in high risks, therefore, the Viet Nam’s stock market is likely to correct this week. — VNS

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