VN expects volatility over profits, oil prices

Monday, Feb 22, 2016 08:05

HA NOI (Biz Hub) — Viet Nam's stock markets may face strong fluctuations this week as investors show concern over global oil prices and the drive for short profits from stocks that saw big jumps this week, brokerage firms wrote in their weekly reports.

Vietnamese shares were mixed on Friday, ending the first trading week higher after the Tet holiday. The benchmark VN Index on the HCM Stock Exchange rose 0.3 per cent to close at 554.03 points, rising 1.7 per cent from the previous trading week.

Also, the HNX Index on the Ha Noi Stock Exchange inched down 0.2 per cent on Friday to close last week at 77.81 points, however, it rose 1.2 per cent during the week.

Meanwhile, global oil prices continued to show their volatility as the US benchmark West Texas Intermediate (WTI) crude and London-traded Brent crude declined 3.7 per cent each on Friday, to close last week's trading at US$29.64 and $33.01 per barrel, respectively, after the US reported on Thursday that its crude reserves had reached a record level not seen since 1930.

However, they also saw gains over the previous trading week. WTI rose slightly, by 0.7 per cent from one week ago and 13 per cent from its twelve-year low. Also, Brent crude fell 1 per cent from the previous week, but has gained 9.8 per cent in the last six sessions.

Recent gains in global crude prices were attributed to an agreement reached between Russia and Saudi Arabia on a production freeze to improve prices, as well as Iran showing its support for the agreement.

However, the volatility of oil prices remained a problem for investors as Iran, on Thursday, announced it will maintain oil production output to win back market share, after the country had trade sanctions removed last month.

The upward trend in oil prices last week helped boost local energy stocks, including PetroVietnam Gas Corporation (GAS), PetroVietnam Drilling and Well Service Corporation (PVD) and PetroVietnam Technical Service Corporation (PVS), which rose 12 per cent, 11 per cent and 7.7 per cent in the first trading week after the Tet holiday. However, these stocks may decline this week if investors seek profits from their gains.

In addition, the stock markets may also face strong selling from investors, as they seek profits from those firms that made significant gains last week, including banks, which saw gains on a weaker Vietnamese dong and better business performances for last year, compared to 2014.

Last week, Viet Nam's central bank raised the reference mid-point rate for its exchange trading band by VND39 to VND21,900 per US dollar, which was considered to be a move to help avoid speculation over dollars in the unofficial market.

Among gainers, the Bank for Investment and Development of Vietnam (BID) rose 0.6 per cent, Sai Gon-Ha Noi Bank (SHB) added 3 per cent and Military Bank (MBB) jumped 5.4 per cent. MBB also attracted investor attention after it officially raised foreign ownership by 10 to 20 per cent on Friday.

Other large-cap stocks also had a good week, but they face profit-takings from investors. Among these stocks, dairy firm Vinamilk (VNM) rose 4 per cent during the week, after the company announced it will buy back more than 400,000 shares to provide bonuses to 12 high-ranking executives in the company, BIDV Insurance Corporation (BIC) surged 15.4 per cent after it announced it would allow more foreign ownership, and Binh Minh Plastic JSC (BMP) gained 4.9 per cent after earning higher profits last year, compared to 2014.

Of note, market liquidity advanced last week from the trading week's figures recorded before the Tet holiday. Both local bourses traded more than 161.7 million shares, worth VND2.37 trillion ($105.6 million), an increase of 42 per cent in trading volume and 50 per cent in trading value from the previous week. — VNS

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