VN stocks to rally on crude prices and stable US rates

Monday, Mar 14, 2016 08:12

The benchmark VN Index on Friday inched up 0.2 per cent to finish last week at 577.26 points. — VNS Photo Truong Vi

HA NOI (Biz Hub) —Vietnamese shares may extend rallies this week on expectations that recently improved crude prices will help boost energy stocks, while investor confidence rises on stable US interest rates, brokerage firms wrote in their weekly forecasts.

The benchmark VN Index on Friday inched up 0.2 per cent to finish last week at 577.26 points, extending its gain of 1 per cent to a second day. Additionally, the southern index gained 0.6 per cent during the last trading week.

The HNX Index on the Ha Noi Stock Exchange also added 0.2 per cent on Friday to end the trading week at 80.06 points, rising 1.2 per cent in the last three trading sessions. The northern index gained 0.5 per cent from the previous week.

Global stock markets have responded to the movements in oil prices in recent months, thus, the increase in crude prices in the last two and a half months has helped stocks bounce back strongly.

Both US benchmark crude West Texas Intermediate (WTI) and London-traded Brent crude displayed strong volatility last week, however, they managed to close at higher values from the previous week and extended their rallies for over one month.

WTI rose 1.7 per cent on Friday to close last week's volatile trading at US$38.50 per barrel. It surged nearly 47 per cent in the last month, from the twelve-year low of $26.21 per barrel.

Meanwhile, Brent crude added 0.9 per cent to close last week's trading at $40.39 per barrel. It rose one-third over the last month.

Recent rallies in oil prices helped local energy stocks last week, especially the largest ones, such as PetroVietnam Gas Corporation (GAS), PetroVietnam Drilling and Well Service Corporation (PVD), PetroVietnam Coating Corporation (PVB) and PetroVietnam Mud Drilling Corporation (PVC).

These stocks added 3.9 per cent, 4.7 per cent, 5.6 per cent and 8.5 per cent during the week.

Oil prices are widely expected to extended rallies, as some members of the Organisation of Petroleum Exporting Countries (OPEC) may hold a meeting with other producers, such as Russia, to boost prices.

However, such a meeting will not likely be held soon, as Iran, one of the top OPEC producers, could delay talks in order to restore its output closer to the pre-sanction level of 3.6 million barrels per day, analysts said, adding that Iran may agree to a production freeze following the country's elections.

Additionally, investor confidence may be bolstered on expectations that the US central bank will keep its rates stable after this week's meeting, while China's central bank will not further weaken the yuan to boost exports.

Any rate hikes made by the US central bank and a weaker Chinese yuan may force Viet Nam's central bank to devalue the Vietnamese dong in order to protect its exports and production, which could lead to investors' losses in the local markets.

Investor confidence last week was low, ahead of the US central bank's meeting, pulling banks down. Vietcombank (VCB) fell 0.5 per cent during the week, while the Bank for Investment and Development of Viet Nam (BID) and Vietinbank (CTG) each dropped 2.2 per cent.

Securities firms also made gains as market liquidity remained high last week. Both local markets traded nearly 200 million shares each day, worth VND3 trillion ($133.8 million), an increase of 6.4 per cent in trading volume and 11.5 per cent in trading value.

Among those stocks, HCM City Securities Corporation (HCM) rose 1.6 per cent from the previous week, VNDirect Securities Corporation (VND) surged 6 per cent, and Sai Gon-Ha Noi Securities Corporation (SHS) rocketed 14 per cent. — VNS

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