The benchmark VN-Index could surge back to the 732 points peak seen a month ago on the back of strong buys by foreign investors as well as positive economic indicators, analysts say.

“I share the view that the VN-Index will conquer the old peak of 732 points in May, though it will not be easy,” said Nguyen Ngoc Lan, head of analysis at Agribank Securities Joint Stock Company.

Lan told financial portal tinnhanhchungkhoan.vn that given the information deficiency in May, macroeconomic statistics show that the national economic condition is improving and on a good track of recovery.

In addition, steady buys by foreign investors will remain a major boost to the market, Lan said.

After the public holidays early last week, the VN-Index had a positive start this month with a rise of 0.3 per cent in the last three trades, closing Friday at 720 points.

On the Ha Noi Stock Exchange, the HNX-Index was up 0.2 per cent for the week, ending Friday at 89.71 points.

Vietstock’s data showed foreign investors have been collecting local shares in the past three months for a total value of roughly VND5.2 trillion (US$229 million), excluding extraordinary negotiation value.

Large-cap stocks, mainly banks, were the major support for the market last week as most of listed banks gained substantial value after they reported impressive profits in the first quarter.

“The VN-Index has sent positive short-term signals when staying firmly above the support 720 point level. Investor sentiment is optimistic, reflecting in high liquidity and progressive movements of financial stocks,” said Vu Minh Duc, head of analysis for individual clients at Viet Capital Securities Joint Stock Company.

Duc said besides blue chips, money flows are also seeking to medium- and small-cap (penny) stocks which are promising larger gains in the short term.

Low-valued shares of automobile dealers, fertilizer manufacturers, sugar producers, plastic products makers and real estate companies had an exciting session on Friday with many advancing on strong buys by local investors.

“In my opinion, though fundamentals of this stock group are not prominent, short-term returns are feasible for risk-taking investors,” Duc

Liquidity remained high with over 263 million shares averaging VND4.9 trillion (nearly $216 million) traded in a single session in the two markets last week.

However, large-cap stocks which are usually the market supporter have shown signs of weakening, particularly banks and prominent food and beverage firms like Vinamilk, Masan Group, Kido Group, and Habeco.

“The market needs another leading stock group as banks will find it difficult to maintain their rise after sharp gains last week while investors increase profit taking,” analysts at Vietnam Investment Securities Joint Stock Company (IVS) wrote in a note.

IVS reckons the VN-Index may continue its rise but has warned the market is entering the sensitive area where downside pressure is building and the market needs more supportive factors to sustain its growth.

Oil stocks struggle

Oil and gas stocks have declined steeply in the past week and stayed in their bottom range because of unfavorable movements in the global oil markets.

PetroVietnam Drilling and Wells Service (PVD) traded at its lowest price of around VND16,500 a share since its debut in December 2006, after the company reported a loss of nearly VND200 billion in the first quarter.

The biggest listed energy stock, PV Gas (GAS), also gave in over 2.2 per cent in the last four sessions.

Global oil prices marked the fifth declining session on Thursday to their lowest since mid-November due to increasing supply in the US market. The US West Texas Intermediate (WTI) and Brent crude both dipped 4.5 per cent to settle at $45.43 and $48.26 a barrel, respectively.

A report by Bao Viet Securities said that the US oil output rose over 10 per cent since mid-2016 to 9.3 million barrels per day, levels not far off top producers Russia and Saudi Arabia, and making it possible that the output cut agreed by OPEC early this year would not work.

At home, some oil and gas companies suffered losses in the first quarter while some have targeted lower business results in 2017.

Prospects of this stock group are largely discounted on the back of volatile global oil prices. – VNS