Market to grow slowly amid ETF reviews, more selling

The Vietnamese stock market may move marginally up as investors look forward to foreign exchange-traded funds (ETFs) to complete their quarterly investment reviews.

Trading activity at Vietcombank head office in Ha Noi. 

The US-based iShares MSCI Frontier 100 ETF on Friday completed its quarterly review.

The fund’s quarterly review had little impact on the local stock market and the market ended slightly up as investors waited for its final results.

The benchmark VN-Index on the Ho Chi Minh Stock Exchange rose 0.36 per cent on Friday to end at 864.47 points

After iShares MSCI Frontier 100 ETF, the London-based FTSE Vietnam ETF is expected to announce its new list of investees on June 6.

According to SSI Securities (SSI), the British ETF will not make any changes to its investment list this time. Instead, the fund will just re-calculate the proportion of local stocks in the portfolio.

Calculation had been expected to complete on May 29. Target stocks in FTSE Vietnam ETF’s list are large-cap firms.

In a recent report, SSI Securities’ research unit forecast FTSE Vietnam ETF will increase investment in three stocks – Vingroup (VIC), Vinhomes (VHM) and Vietcombank (VCB).

Vingroup and Vinhomes shares will account for 15 per cent of the total portfolio, up 0.5-1.11 percentage points while Vietcombank shares will take an 8.65 per cent stake in the list, up 2.22 percentage points.

The fund is forecast to cut its investment in the remaining 15 stocks such as dairy producer Vinamilk (VNM; down 1.69 percentage points), Vincom Retail (VRE; down 0.28 percentage points), and steel maker Hoa Phat (HPG; down 0.32 percentage points).

“Investors will become cautious in the week that ETFs carry out their investment review, so trading may focus on small-cap and medium large-cap stocks,” MB Securities Co (MBS) said in a note.

 

But the quarterly review by ETFs is not the only thing that matters. A possible downturn of local purchasing power may affect the market’s short-term uptrend, according to analysts.

Individual investors have played a big role in driving the market upwards from its three-year bottom on March 24 as stocks were sent down to very cheap, attractive price levels.

The benchmark VN-Index had gained significantly by nearly 31 per cent in two months from March 24 to May 21. That made the Vietnamese stock market one of the best-performing markets in the world in April and May.

But growth slowed down last week to 1.37 per cent with alternate ups and downs during the week. Analysts are expecting more bumpy sessions in the coming weeks.

Phan Dung Khanh, investment director at Maybank Kim Eng Securities (MBKE), said purchasing power of domestic investors – most of them are individuals – was still strong enough to lift the market last week while institutional investors – most of whom are foreign – were only willing to sell.

The escape of institutional investors, considered “big money”, and limited resources of individual investors may drag on the local markets in coming weeks, he told tinnhanhchungkhoan.vn.

“Higher market valuation and a slow-recovery economy increase the risks on the local stock market,” he said. “The price-to-earnings (P/E) ratio of the Vietnamese market is rising fast, so it will naturally slow down the market growth in June.”

Agriseco’s investment and analysis director Nguyen Anh Khoa said new investors, who opened accounts in late March to hunt for cheap stocks, were the major driving factor of the stock market in April and May.

“Most of their investments have gained 20 per cent. But they will just run away as quick as they come,” he said. “Lower second-quarter corporate earnings will also encourage investors to divest from local companies.”

“But disappointing earnings have been widely expected, so selling pressure would not be harsh on local stocks and the market can absorb such pressure,” Khoa said. — VNS

 
 

Other News

.
COVID-19 woes: Footwear exports likely to fall short of target
COVID-19 woes: Footwear exports likely to fall short of target
BUSINESSicon  17/09/2020 

Footwear exports this year are unlikely to hit the target of US$24 billion because of the fallout of the Covid-19 pandemic.

VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 18
VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 18
BUSINESSicon  18/09/2020 

Mining industry unable to enjoy tax incentives

FTAs help attract more foreign investors to Vietnam
FTAs help attract more foreign investors to Vietnam
BUSINESSicon  17/09/2020 

Free trade agreements (FTAs) that Vietnam has signed with its partners have been an important factor attracting foreign investments to the country.

Real estate businesses struggling amid pandemic
Real estate businesses struggling amid pandemic
BUSINESSicon  17/09/2020 

The severe economic blows from COVID-19 have forced scores of businesses to suspend operations and even file for bankruptcy, with real estate companies among the hardest hit.

Apartment selling prices on the rise in Hanoi
Apartment selling prices on the rise in Hanoi
BUSINESSicon  17/09/2020 

Apartment prices have increased to a new level, particularly in center city areas.

Gov’t to ask NA to waive charges for water exploitation rights
Gov’t to ask NA to waive charges for water exploitation rights
BUSINESSicon  16/09/2020 

Thousands of businesses will not have to pay for the right to exploit water this year if a plan submitted by the Government is approved by the National Assembly.

VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 17
VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 17
BUSINESSicon  17/09/2020 

Measures needed to support COVID-19-hit enterprises

VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 16
VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 16
BUSINESSicon  16/09/2020 

ADB cuts Vietnam GDP growth forecast to 1.8% in 2020

Large growth potential for Vietnam banking services in long-term
Large growth potential for Vietnam banking services in long-term
BUSINESSicon  16/09/2020 

Many listed banks witnessed weak performance of fee income growth in the first six months of the year due to the Covid-19 pandemic.

Number of hotels on sale reaches record in Vietnam
Number of hotels on sale reaches record in Vietnam
BUSINESSicon  16/09/2020 

Hotels for sale is reaching a record number in a decade in Vietnam.

Some businesses still thrive amid COVID-19
Some businesses still thrive amid COVID-19
BUSINESSicon  17/09/2020 

Many consumer goods and food retailers are opening new shops, while others have had to shut down and give back retail premises to landlords.

Hundreds of abandoned real estate projects in Hanoi to be inspected
Hundreds of abandoned real estate projects in Hanoi to be inspected
BUSINESSicon  16/09/2020 

The Prime Minister has assigned the Ministry of Natural Resources and Environment and Hanoi authorities to check reports in local newspapers about 300 pending or abandoned real estate projects in the city.

VN to be only country in region to attain positive growth in 2020: report
VN to be only country in region to attain positive growth in 2020: report
BUSINESSicon  15/09/2020 

Vietnam is expected to be the only Southeast Asian economy to achieve growth this year, with its GDP rising by a likely 2.3 per cent.

Rise for national pride
Rise for national pride
FEATUREicon  17/09/2020 

In the context of the Covid-19 pandemic which that has changed value chains, this is an opportunity for us to rethink and rise. The chance to catch up with the world is huge if the economy is restructured.

Vietnam ranked world’s second M&A attractive market: Euromonitor
Vietnam ranked world’s second M&A attractive market: Euromonitor
BUSINESSicon  15/09/2020 

The country is set to score 102 and 94.6 out of the maximum of 250 in 2020 and 2021, staying behind only the US with its respective scores of 108.9 and 112.5.

VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 15
VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 15
BUSINESSicon  15/09/2020 

 Shrimp, tuna exports to EU see positive signs

The trio of ‘petrol tycoons’ in prison
The trio of ‘petrol tycoons’ in prison
BUSINESSicon  15/09/2020 

They are ‘Phat Oil’ in Hai Phong, ‘Son Iron’ in Thanh Hoa, and Trinh Suong in Soc Trang.

Vietnam’s breeding farms: pigs eat ginseng, buffaloes drink wine
Vietnam’s breeding farms: pigs eat ginseng, buffaloes drink wine
BUSINESSicon  17/09/2020 

At some breeding farms in Vietnam, livestock is raised in a special way: eels are bred in plastic cans, pigs eat ginseng and listen to music, and buffaloes drink wine every morning.

Stagnated construction leads to large steel inventories
Stagnated construction leads to large steel inventories
BUSINESSicon  14/09/2020 

The COVID-19 pandemic has led to many construction and real estate projects being delayed, resulting in large inventories of construction materials, especially steel.

Origin fraud threatens local exporters
Origin fraud threatens local exporters
BUSINESSicon  15/09/2020 

After a local silk importer was recently found to be disguising Chinese products as Vietnamese to sell them in India, experts have warned of the risks of losing out on exports and preferential tariffs due to intellectual property (IP) violations.

 
 
 
Leave your comment on an article

OR QUICK LOGIN