3Q results to dominate headlines

Some heavy hitters are expected to deliver some eye-catching 3Q results

As domestic stock markets limp along with no specific news from macro economic sectors and global movements, third quarter (3Q) corporate earnings news will soon dominate local markets.

Analysts with Ho Chi Minh City Securities Corporation (HSC) said the 3Q earnings season would see strong credit growth with a 1 per cent increase per month on average, compared to just 0.5 per cent a month earlier this year.

“We note that credit growth is a good leading indicator of corporate activity and even profitability and we suspect most earnings will be positive,” said Fiachra MacCana, HSC’s head of research.

Bao Viet Securities Company’s (BVS) equity strategist Pham Thanh Thai Linh said listed companies’ business results would remain positive, except for those hit by recent exchange rate adjustments. BVS expects the positive business news to support markets in the short-term.

Linh, however, said in the context that investor sentiment had not considerably improved, it was still difficult to attract large cash flows.

“Thus, we recommend investors keep watching what happens,” said Linh.

Nguyen Duc Hung Linh, director with Saigon Securities Incorporated (SSI)’s investment advisory division, said 3Q and year-end earnings would be clearer in October.

“But we do not expect blue-chips, the leading movers of the VN-Index, to end up with profit surprises to stimulate the market. For smaller-capped stocks, any rally would raise concerns over price manipulation,” said Linh.

Le Chi Phuc, Saigon Invest Fund Management Company’s investment director, said markets would not benefit from corporate earnings as banks, property developers, which account for 70 per cent of the VN-Index, would not have good earnings due to business challenges this year.

While positive factors faded in October, demand might not rush in while sellers were more vulnerable. “Investors should watch the market with caution and have fund protection plans ready,” added Linh.

The overall earnings per share for listed firms is estimated to grow 9.6 per cent this year, compared to around 31 per cent last year, according to StoxPlus statistics.