Challenge awaits VN Index at 690 points

The VN Index, Viet Nam’s benchmark stock index, could fall back to the 675-680 range if it fails to reach 690-692 points, according to analysts and securities firms.-VNA/VNS Photo

The HCM Stock Exchange’s index on Friday dropped 0.3 per cent to finish at 685.06 points, extending losses for a second day. However, the southern market index finished 0.8 per cent higher than the previous week’s closing.

The HNX Index on the Ha Noi Stock Exchange increased very slightly to close at 83.34 points, ending Friday with a weekly gain of 1.5 per cent.

Meanwhile, market trading liquidity fell from the previous trading week. An average of 127 million shares was traded in each session, a week-on-week decrease of 4.7 per cent. Daily trading value inched down 0.3 per cent to nearly VND2.52 trillion (US$112 million).

“Investors made some attempts to lift the stock indices on Friday morning, however, when they realised the VN Index could not reach the resistance range of 690-692 points, they increased selling during the afternoon trading session, resulting in the VN Index closing lower than Thursday’s level,” said Chau Thien Truc Quynh, Viet Capital Securities’ head of brokerage division.

The benchmark would make attempts to test the resistance level again, but it could fall back to the support range of 675-680 points if it fails, she said, adding that market trading will remain weak from now until the Tet Lunar New Year, as investors focus on earning profits and converting those profits into cash to conclude the year.

Sai Gon-Ha Noi Securities Corp (SHS) shares the view that the benchmark index made a weekly gain last week, but weekly growth was lower, proving that investors’ selling was relatively strong when the benchmark approached the testing level.

Further, investor confidence was low as investors tended to stand by market trading prior to the Tet holiday, lowering liquidity from the previous week, the company said in a note.

“The VN Index will fluctuate this week with lower trading liquidity, and it will face the support range of 673-674 points and the testing range of 690-692 points.”

Focus of the week

Fertiliser producers, banks, energy firms and property developers will attract a lot of attention from investors this week, according to analysts.

Chau Thien Truc Quynh, analyst at Viet Capital Securities, said that fertiliser producers, such as PetroVietnam Fertiliser and Chemical Corp (DPM) and PetroVietnam Ca Mau Fertiliser JSC (DCM), will rise further on expectations that their future earnings would increase after the Ministry of Industry and Trade received approval for its proposal on reducing value-added taxes for those companies.

DPM gained 8.7 per cent in the last two sessions, as DCM jumped 9 per cent during the same period.

The proposal would first benefit fertiliser companies with top market shares, firm reputations and advantages over business scales, she said. Fertiliser stocks are also attractive, as they have fallen during 2016, and those companies often pay high and stable dividends to shareholders.

According to Nguyen The Minh, Sai Gon Securities Inc’s senior analyst on the capital market, despite recent falls, bank stocks continue rising on expectations for strong quarterly earnings, while banks will be able to lend more after the State Bank of Viet Nam raises their capital loan-to-deposit ratio (LDR).

Also, energy stocks will help lift the stock market on higher oil prices, and property developers are expected to deliver positive quarterly earnings reports and attract investors, he said.