Profit taking to weigh on local market, but September may be bright

Vietnam’s stock market rally may slow this week as investors eye profits but the one-month projection is still optimistic.

Profit taking to weigh on local market, but September may be bright

Passengers check-in for a Vietnam Airlines flight in Da Nang on August 12. The firm shares (HoSE: HVN) gained a total of 6.3 per cent last week.

The benchmark VN-Index on the Ho Chi Minh Stock Exchange last week gained a total of 2.57 per cent to 901.54 points.

On the Ha Noi Stock Exchange, the minor HNX-Index inched up 0.25 per cent to 126.15 points by the end of the week.

The VN-Index has increased by 14.8 per cent over the last six weeks since July 27. During the same time, the HNX-Index rose 22.6 per cent.

Consumer-related stocks had the best gains last week. Large-cap firms in the sector such as retailer Mobile World Investment (MWG) and airlines Vietjet (VJC) and Vietnam Airlines (HVN) advanced 1.4 per cent, 7 per cent and 6.3 per cent, respectively.

Financial-banking stocks also made strong gains such as SSI Securities (SSI), HCM City Securities (HCM), insurer Bao Viet Holdings (BVH), Vietinbank (CTG), Bank for Investment and Development of Vietnam (BID), and HDBank (HDB).

“The VN-Index has technically defeated the resistance of 870 points – which should pave the way for the index to hit its previous peak of 905.65 points in June,” Sai Gon-Ha Noi Securities (SHS) said in its weekly report.

“In the short run, the benchmark – led by the large-cap sector VN30 – has become overbought” and “local stocks will be weighed down by profit-taking after a six-week growing streak,” the company said.

“The market may experience considerable corrections and volatility during its uptrend,” Bao Viet Securities (BVSC) said in its report. “The market will continue to see a wide divergence among stock sectors” as “large-cap stocks may rotate their increase to support the market’s upward momentum.”

The VN-Index may struggle between 900 points and 905 points, according to SHS, while BVSC expected the market to rise to 920 points, then settle down.

Among the factors that may affect domestic market sentiment this week are the movement of US stocks, the change of Viet Nam-focused exchange-traded funds (ETFs), and the development of the coronavirus situation in the country.

US stocks fell on Friday as investors took profits from heavyweight tech stocks. The world’s largest economy is also entering a volatile two-month period prior to the presidential election.

The latest US employment report on Friday showed job growth slowed in August as government-funded financial aid was running out while the Democrats and Republicans reportedly lack consensus on a new stimulus package.

Following the events, the Federal Reserve chairman Jerome Powell said the US central bank will keep interest rates low as long as possible.

Shining September

Despite the potential challenges, the Vietnamese stock market may fly high in September with the VN-Index expected to touch 920 or 940 points, securities firms forecast.

In August, the VN-Index gained 10.4 per cent – the highest growth in the world – and “the growth was based on the efforts of the Government, local authorities and people to restrain the spread of coronavirus,” Dinh Quang Hinh, VNDirect Securities’ head of macroeconomics and market strategy told Viet Nam News.

 

“Another reason is the positive performance of global stocks, especially the US market, and the introduction of the Taiwanese Viet Nam-focused investment fund with total committed capital of US$160 million,” he said.

The Taiwanese fund managers plan to buy fund certificates of the domestic exchange-traded fund VFMVN Diamond.

The ETF debuted on the Ho Chi Minh Stock Exchange on May 12 and tracks stocks in the southern bourse’s VN Diamond Index, which represent companies that have reached their foreign ownership limit.

The appearance of the new fund on the Vietnamese equity market helped boost large-cap stocks such as Mobile World Investment (MWG), tech group FPT Corp (FPT) and Refrigeration Electrical Engineering Corp (REE) as well as other blue chips, in which there is limited room for foreign investors to buy shares, such as realty firms Vinhomes (VHM) and Vingroup (VIC) and dairy producer Vinamilk (VNM).

According to Hinh, net domestic purchasing, especially from institutional investors, reached a 15-month high of VND2.1 trillion ($90.5 million) since May 2019. More than 56 per cent of the figure, worth VND1.18 trillion, came from securities firms.

“Brokerage houses may be preparing for the official penetration of the Taiwanese fund,” he said, adding domestic purchasing power has helped the market cope with the outflow of foreign capital.

Foreign investors net-sold VND3.43 trillion worth of local shares in August, raising total net selling value to nearly VND7.8 trillion.

The market uptrend may continue in September once the Taiwanese fund starts investing in local assets, he forecast.

According to securities companies, other factors that will lift the market in September include the cheap valuation of Vietnamese stocks compared to other regional markets, declining interest rates, better control of the disease, the recovery of trade activities, and improved disbursement of the State budget for State-funded projects.

Several sectors have performed quite well despite the COVID-19 pandemic having hit the global and Vietnamese economies hard in the past nine months, Hinh at VNDirect Securities Corporation said.

Businesses in fertiliser and petrochemical production, pharmaceuticals and medical equipment, and materials may report better-than-expected earnings in the last two quarters of the year, Hinh said.

“Listed companies will report better earnings in the third quarter from the past two quarters” as “their businesses were tackled quite hard in the first half of the year by the disease and social distancing measures,” he added.

“But the third quarter of this year will still be a big disappointment compared to 2019,” he said.

“What we are expecting is investors have braced for earnings contraction,” Hinh said. “The overall morale will not be ravaged by such expectations.” — VNS

The multi-billion dollar empires that exist outside the stock market

The multi-billion dollar empires that exist outside the stock market

Many large corporations, valued at billions of dollars, do not intend to list their shares on the bourse.

International capital heads for Vietnam, stocks prosper

International capital heads for Vietnam, stocks prosper

Foreign capital continues to pour into Vietnam, bringing benefits to industrial property developers and the stock market.

 
 

Other News

.
ASEAN pushes forward with 5G connectivty cooperation
ASEAN pushes forward with 5G connectivty cooperation
BUSINESSicon  17/10/2020 

As ASEAN chair this year, Vietnam is playing a crucial role in further cementing joint activities within the bloc via boosting the application of high technologies to adapt to Industry 4.0, which is sweeping throughout the region.

Real estate stocks await cash flow
Real estate stocks await cash flow
BUSINESSicon  17/10/2020 

Domestic and foreign capital flow is expected to bolster real estate shares after the COVID-19 pandemic as many investors are paying attention to the industry.

Many hoteliers intend to divest capital due to heavy losses
Many hoteliers intend to divest capital due to heavy losses
BUSINESSicon  16/10/2020 

Over the past eight months, hotel room tariffs have plunged and hotel room occupancy rates have remained low, forcing several hoteliers to divest capital with many financially weak hotels in the local market being put up for sale.

Meeting expectations of the corporate bond market
Meeting expectations of the corporate bond market
BUSINESSicon  16/10/2020 

A new government decree tightens conditions on the issuance of corporate bonds. However, before the decree came into effect, enterprises flooded the market with new issuances.

Thai billionaire, European brewer lose money in Sabeco investment deal
Thai billionaire, European brewer lose money in Sabeco investment deal
BUSINESSicon  16/10/2020 

The Sabeco price has seen a strong recovery in the last half a year, but is still at a low price. Both Thai billionaire and the big brewer Heineken have lost money because of the drop in Sabeco share price.

Investors lose billions of VND as land prices keep rising
Investors lose billions of VND as land prices keep rising
FEATUREicon  17/10/2020 

A lot of real estate traders have missed opportunities to make huge profits because they decided to postpone purchasing plans, hoping that prices would decrease further.

Salary increases in 2020 lowest in 10 years: survey
Salary increases in 2020 lowest in 10 years: survey
BUSINESSicon  16/10/2020 

Salaries increased by 6.5% this year at multinational companies (MNCs) and 5.2% at Vietnamese companies, and are forecast to increase by 7 per cent and 7.7% next year, according to the Talentnet – Mercer Total Remuneration Survey.

The right structural adjustments help Vietnam achieve long-term growth aspirations
The right structural adjustments help Vietnam achieve long-term growth aspirations
BUSINESSicon  17/10/2020 

No nation has escaped the threat of COVID-19 to lives and livelihoods, with many countries seeing cases resurge recently. 

State firms more resilient than foreign, Vietnamese private companies: survey
State firms more resilient than foreign, Vietnamese private companies: survey
BUSINESSicon  15/10/2020 

Business resilience is highly correlated with level of digitisation, the Business Pandemic Resilience Diagnostic conducted by Grant Thornton...

Pandemic a test of fire for Vietnamese enterprises
Pandemic a test of fire for Vietnamese enterprises
BUSINESSicon  15/10/2020 

The COVID-19 pandemic has been a test for Vietnamese businesses as many have been and will be struggling to recover for the foreseeable future. 

Five expy projects unlikely to attract private investors
Five expy projects unlikely to attract private investors
BUSINESSicon  15/10/2020 

Although the National Assembly Standing Committee has given its approval to switch three of the eight subprojects of the North-South Expressway from the public-private partnership (PPP) format into wholly State-invested, 

Only 5% FDI projects in Vietnam use high technologies
Only 5% FDI projects in Vietnam use high technologies
BUSINESSicon  15/10/2020 

Vietnam is home to 32,539 valid foreign direct investment (FDI) projects with registered capital of a combined US$381 billion, of which US$233 billion has been fully disbursed.

The Vietnamese brain will decide
The Vietnamese brain will decide
FEATUREicon  16/10/2020 

"Vietnamese have nothing but brains to develop the country in the future." 

Stable outlook expected for Vietnamese dong
Stable outlook expected for Vietnamese dong
BUSINESSicon  16/10/2020 

While Vietnam is at risk of being listed as currency manipulator by the US, such a risk appears low, as the US will likely continue to reduce its dependence on Chinese exports by reorganizing its supply chain with other partners.

Vietnam banking sector to suffer in 2020 before rebounding in 2021
Vietnam banking sector to suffer in 2020 before rebounding in 2021
BUSINESSicon  15/10/2020 

Fitch Solutions expected credit growth to weaken to 7% in 2020 from 13.7% in 2019, but the growth is predicted to pick up to 12% one year later.

Realising revised growth ambitions
Realising revised growth ambitions
BUSINESSicon  15/10/2020 

Vietnam’s fourthquarter economic outlook is brighter on the back of a rise in domestic consumption and public investment.

Businesses line up for further support
Businesses line up for further support
BUSINESSicon  15/10/2020 

Continued facing with massive woes, the business community in Vietnam is in dire need of the government’s assistance for investors and enterprises to struggle through the global health crisis and grabbing new business

Infrastructure development at the centre of PPP decree direction
Infrastructure development at the centre of PPP decree direction
BUSINESSicon  16/10/2020 

Further clarifying the legal framework for infrastructure development via wider participation of private investors is expected to help the country attract more funding into the industry.

Gov’t support aids automobile industry
Gov’t support aids automobile industry
BUSINESSicon  14/10/2020 

The domestic automobile industry was forecast to thrive, given the Government’s supports in tax policies for imported automobile components coupled with the increasing income of citizens.

Digital economy and fintech see growth amid COVID-19
Digital economy and fintech see growth amid COVID-19
BUSINESSicon  15/10/2020 

The Prime Minister’s Economic Advisory Group met with the local fintech firm MoMo in HCM City on Monday.

 
 
 
Leave your comment on an article

OR QUICK LOGIN