Weak market sentiment may continue to weigh on investors, causing stocks to consolidate at current price levels this week, as increasing political and economic risks rattle global markets.

Investors during a trading session at Sai Gon Securities Inc (SSI). 

The Vietnamese stock market underwent a quiet trading week with attention shifting to the US mid-term elections and the Fed meeting in the middle of last week.

The two events did not have a significant impact on both global and local markets as they had been priced in earlier so that investors could avoid potential risks.

On Tuesday, the Democrats took over the House of Representatives – the lower house of Congress – from the Republicans in the US mid-term elections under the presidency of Donald Trump and the latter retained control of the Senate – the upper house.

The result of the election was considered a rebuke of the Trump administration and analysts expect the latest change would make it harder for president Trump to pass new policies, thus lowering the volatility of global markets.

Meanwhile, the US Federal Reserve on Thursday decided to keep its lending rates unchanged but maintain course for a rate hike in December.

The decision had been widely forecast and it did not have any big impacts on global markets. But local markets fell from the previous week’s end as investors were on edge with the two US events.

Viet Nam’s benchmark VN-Index on the Ho Chi Minh Stock Exchange ended last Friday down 1.29 per cent at 914.29 points, totalling a weekly decline of 1.14 per cent.

The minor HNX Index on the Ha Noi Stock Exchange was in line with the benchmark, losing 1.46 per cent to finish last week at 103.01 points and dropped total 2.6 per cent week-on-week.

According to MB Securities JSC analyst Ngo Quoc Hung, the market will be short of supportive news over the next three weeks, so the benchmark VN-Index may continue falling and “settle itself around 900 points.”

“In the worse scenario, the market may go down and test its bottom-line of 890 points again. The VN-Index has previously bounced back from this level three times,” he told news site tinnhanhchungkhoan.vn.

The market has run out of gaining momentum as third-quarter corporate earnings season is over and even their earnings were priced before, Nguyen Hong Khanh, head of market analysis division at the Vietnam International Securities Co (VIS) said.

“There were no surprises to investors during the past earnings season. What boosts the stock market now is the stability of macro-economic conditions and better corporate earnings next year,” he said.

“However, those two matters would have to depend a lot on global trading and political conditions, so the market would have to wait and consolidate at its short-term bottom line (of 900 points),” Khanh added.

According to Sai Gon-Ha Noi Securities JSC (SHS), potential risks resulted in the decline of trading liquidity last week.

An average of nearly 178 million shares was traded in each session last week, worth VND3.52 trillion (US$156.7 million).

The previous week’s trading figures were 209.7 million shares in volume and VND4.3 trillion in value.

Petroleum rises till year-end

Oil and gas stocks are expected to recover in the last two months of the year as analysts are counting on a rebound of crude prices, according to VNDirect Securities JSC (VNDS).

The Ha Noi-based securities firm said in a report that Russia’s record-high production and increasing supply of Saudi Arabia cannot offset the decline of market supply after the US re-imposed economic sanctions on Iran in early August.

In addition, the crude market experienced some glitches in supply as several nations were holding elections such as Nigeria and Libya, and the same scenarios are forecast to happen again, VNDS said.

Vietnamese petroleum stocks have declined sharply in recent weeks on the decline of oil prices and it offers good opportunities for those with tastes for the energy sector, the brokerage said.

Brent crude has lost 13.8 per cent from its one-month high of $81.41 a barrel while US benchmark WTI has declined by 16.3 per cent.

In the same period, local energy stocks such as PetroVietnam Gas (GAS), PetroVietnam Technical Services (PVS) and PetroVietnam Drilling and Well Services (PVD) have dropped between 20.7 per cent and 23 per cent. — VNS