Vietnamese shares were sluggish in the past week with the benchmark VN-Index suffering the first loss after four gaining weeks.

The current condition is expected to continue in the first two weeks of October.

The benchmark VN-Index on the HCM Stock Exchange closed 0.05 per cent below on Friday to finish last week at 804.42 points. It posted a weekly loss of 0.3 per cent, but still posted a growth of 2.7 per cent in September.

The HNX-Index on the Ha Noi Stock Exchange gained 0.21 per cent on Friday to close at 107.66 points, increasing 1.1 per cent on a weekly basis and enhancing its uptrend since the beginning of the month with a total growth of 3.6 per cent.

According to securities analysts, the current market trading conditions are quite poor, as investors are unwilling to make new purchases and listed companies are running out of supportive information, until their quarterly earnings reports are published.

According to Duong Van Chung, head of brokerage division at MB Securities Company, there are some problems that could make the market trade cautiously in the first two weeks of October.

Firstly, the margin lending balance in Viet Nam’s stock market is at a high level, and some of the brokerage companies have reached their margin lending limits, he said. “Therefore, the flow of money into the market will be kept under control in the short term.”

Secondly, the share prices of the large-cap companies have made incredible gains recently, and the growth of those shares has been priced in by the investors’ expectations for those companies in the third-quarter earnings reports, Chung said.

Corporate earnings

“Those shares will stall from making further progress in two weeks at least, until the official data on their corporate earnings become public.”

“If their earnings reports, which may come in the third week of October onwards, show higher results than the previous expectations, then their shares will go up again.”

According to Chung, the sectors that should release higher-than-expected quarter earnings reports are real estate, banking and brokerage.

Nguyen Ngoc Lan, senior specialist at Agribank Securities Company, told tinnhanhchungkhoan.vn at a round-table discussion that the stock market was weakening with modest market demand, making the trading liquidity unstable at the moment.

An average of 208.3 million shares were traded in each session of the last trading week, worth nearly VND3.8 trillion (US$168.4 million).

The figures were down 6.8 per cent in trading volume and 5.7 per cent in trading value from the previous trading week.

“The VN Index will move marginally at the level of 800 points and test the current market supply/demand conditions before signalling a clearer trend,” Lan said.

Another factor that could keep the stock market vulnerable in the coming week is foreign investors becoming net sellers in September after eight consecutive months of net buying.

Foreign investors last week posted a net sale value of more than VND300 billion, raising their net sale value in September to VND467.6 billion. Foreign investment in the stock market has reached a total of VND14.5 trillion after nine months. 

VNS