VN market may see short correction this week

Monday, Jun 12, 2017 08:08

Investors monitor market movements at Bao Viet Securities Company in Ha Noi. — VNA/VNS Photo Pham Hau

Local stock markets may see a correction early this week due to rising profit-taking pressure after a long rally, but the downward period is expected to be insignificant owing to investors’ confidence in the market outlook and strong foreign buys.

The benchmark VN-Index on Wednesday set a new nine-year high of 753.46 points for the third time in the past month. Despite the last two declining sessions, the southern market index expanded 1.5 per cent for the week, closing Friday at 749.72 points.

The index has expanded 12.8 per cent since the beginning of this year.

“I see a high possibility that the market will see a downward correction this week, but not too strong,” said Nguyen Ngoc Lan, head of brokerage at Agribank Securities Co.

Lan noted the last two losing sessions indicated investors’ bearish sentiment and the market is exposed to downward risk.

She told the that trading on the two exchange-traded funds (ETFs) during their second-quarter portfolio restructuring may have impacts on the market this week.

On Friday, MVIS Vietnam under the VanEck Vectors Vietnam ETF announced it would add shares of FLC Faros Construction Co (ROS) into the basket of its V.N.M ETF with a weight of 6.5 per cent, making it the fourth largest share of the fund’s portfolio. The fund will spend about US$19.2 million to buy 4.14 million ROS shares in the coming time.

After nine months of listing, ROS has been added in portfolios of the two foreign largest ETFs focusing on Vietnamese shares, including FTSE Vietnam ETF and V.N.M ETF.

However, ROS was among the shares suffering the biggest losses last week, slumping 14.7 per cent for five trading days. Such a steep decline was likely attributable to investor concern about the dilution risk after the company approved the issue of an additional 43 million shares to pay 10-per-cent dividend for 2016’s business results.

During its second-quarter review, V.N.M ETF also removed shares of PetroVietnam Drilling and Wells Service Co (PVD) and PetroVietnam Technical Service Co (PVS), equivalent to sales of 4.57 million PVD shares and 5.66 million PVS shares in its holding.

On June 2, FTSE ETF also reported it would add shares of Sacombank (STB) and real estate Novaland Investment Group (NVL) in its portfolio while removing shares of Hoang Anh Gia Lai Co (HAG), insurer Bao Viet Holdings (BVH) and PetroVietnam Power Nhon Trach 2 Co (NT2).

Shares of Sacombank rose over 12 per cent last week, while Novaland’s shares inched down 0.7 per cent for the week.

Strong buys by foreign traders also supported the market last week with a total net buy value of over VND255 billion on the two exchanges. On the HCM Stock Exchange the net value was VND248.5 billion, while the value on the Ha Noi Stock Exchange was VND6.6 billion.

The HNX-Index on the Ha Noi Stock Exchange increased 3.2 per cent to close Friday at 97.36 points.

Large-cap stocks continued to be the market supporter last week, particularly bank shares like Vietcombank (VCB), BIDV (BID), Vietinbank (CTG), Sacombank (STB), Military Bank (MBB), Asia Commercial Bank (ACB), and other industry leading shares such as Vinamilk (VNM), Hau Giang Pharmarceutical (DHG), FPT Corp (FPT) and steelmaker Hoa Phat Group (HPG).

Many securities firms have forecast the market will fall slightly early this week but the medium-term trend will likely be upward thanks to sustainable growth of large-cap stocks and foreign buys. “The VN-Index may move around 740-750 points this week,” wrote Le Duc Khanh, head of Market Trading Strategy at Maritime Bank Securities Co. — VNS

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