The local stock market is set to experience another week of corrections but the decrease will likely slow down with divergence based on the results of second-quarter earnings, analysts say.– Photo dautuchungkhoan

The local stock market is set to experience another week of corrections but the decrease will likely slow down with divergence based on the results of second-quarter earnings, analysts say.

The benchmark VN-Index on the HCM Stock Exchange lost over 2 per cent last week with four falling sessions and only one mid-week rising trade.

The key index closed Friday at 761.86 points, down 2.7 per cent from the nine-year peak of 782.665 seen on July 6.

On the Ha Noi Stock Exchange, the HNX-Index slumped 2.5 per cent for the whole week, ending at 97.96 points on Friday.

“The market seems to be exhausted and faces risks of downward corrections. However, the speed of fall last week was quite strong and fast, negatively impacting investors’ psychology,” said Nguyen Huu Binh, leading analyst at Vietnam Investment Securities Co, told tinnhanhchungkhoan.vn.

But this could also be a sign that the market will soon retreat to the strong support threshold of 740-750 points, Binh said.

All shares, including large-caps, medium-caps and penny stocks, performed badly last week with a majority of stocks falling across the two exchanges’ electronic boards.

The shares weighing down the market most included PV Gas (GAS), Vinamilk (VNM), big banks like Vietcombank (VCB), BIDV (BID), Vietinbank (CTG), Military Bank (MBB), Mobile World Group (MWG), steel manufacturer Hoa Phat Group (HPG), insurer Bao Viet Holdings (BVH). They were among top 30 largest shares by market value and liquidity on the HCM Stock Exchange.

However, liquidity is waning, which may indicate weaker demand and a possibility that the high selling pressure would soon stop, Binh said, predicting would increase again at the 740-750 points for the VN-Index.

Trading volume through order matching method on the HCM Stock Exchange rose 2.5 per cent over the previous week, averaging 193.3 million shares per session but it was seen that the volume was declining towards the end of the week.

“A downward correction was inevitable after seven consecutive months of growth and in my opinion, this is an essential correction before the market will advance into the next growing period in the last months of the year,” said Nguyen Trung Du, head of the brokerage division in the North region under HCM Securities Co.

Divergence

According to analysts at BIDV Securities Co (BSC), the VN-Index is likely to remain under correction pressure in the next one to two weeks with a support threshold at 750 points. However, they added, the market will also see divergence based on second-quarter earnings results of listed companies.

Nearly 320 out of total 719 companies on the stock exchanges, accounting for 45 per cent of total listed companies, have released their second-quarter earnings as of July 21. In terms of absolute value, net profits of these companies reached VND10 trillion ($439 million), up 10 per cent over the same period of last year.

Five biggest earners were Vietcombank, Pha Lai Thermal Power, Vicostone, Kido Group and Nam Long Investment Group.

About 160 companies reported improved earnings results compared to last year’s same period.

“With such results, the market will likely experience strong divergence in the coming time,” BSC’s stock analysts wrote in a report.

They suggested that investors refrain from investing in the companies with unstable business performance as well as those that have gained large value in the past rallies. – VNS