Investors return from Tet eyeing crude

On Friday of the final trading week before Tet, the benchmark VN Index on the HCM Stock Exchange gained 0.5 per cent to close at 544.75 points. - VNS Photo Gia Vi

On Friday of the final trading week before Tet, the benchmark VN Index on the HCM Stock Exchange gained 0.5 per cent to close at 544.75 points, down 0.1 per cent from the previous Friday. The southern index rose 1.5 per cent during the last three sessions.

Meanwhile, the HNX Index on the Ha Noi Stock Exchange added 0.8 per cent to end at 76.90 points, a 0.04 per cent increase from the previous week's finish. Further, the northern index had risen 1.5 per cent in the last two trading days.

Crude prices will remain a decisive factor this week as they have shown strong volatility during the last two weeks, especially after the Organisation of Petroleum Exporting Countries (OPEC) on Friday indicated its willingness to work with non-OPEC producers to cut their production output in a bid to boost trading prices.

That willingness helped oil prices surge on global trading markets. US benchmark crude West Texas Intermediate (WTI) jumped 12.3 per cent from its twelve-year low of US$26.21 per barrel, reaching $29.44 per barrel on Thursday, while the London-traded Brent crude surged 11 per cent to close at $33.36 per barrel.

However, analysts have doubts about an agreement between OPEC and its competitors, which have resulted in volatile crude prices that have seen the WTI plunge 12.4 per cent since the end of January and Brent crude prices fall 4 per cent during the same period.

Unstable global oil prices also helped pull down local energy stocks. PetroVietnam Gas Corporation (GAS) lost 3.1 per cent in the latest trading week, PetroVietnam Drilling and Well Services Corporation (PVD) fell 3 per cent, and PetroVietnam Mud Drilling Corporation (PVC) dropped 4.3 per cent.

In addition, foreign exchange rates between the Vietnamese dong and the US dollar may help boost the market, as the dollar became weaker against the dong in final trading sessions.

On the last Friday before Tet, Viet Nam's central bank cut its reference mid-point rate for its exchange trading band by VND15 to trade at VND21,861 per dollar. Further, the mid-point rate declined by VND58 from its high of VND21,919 per dollar hit early last month.

A weaker US dollar against the Vietnamese dong may help local importers, such as plastic manufacturers, reduce their expenses to import materials from overseas suppliers for production.

Those companies included Binh Minh Plastic JSC (BMP), Tien Phong Plastic JSC (NTP) and Rang Dong Plastic JSC (RDP), which gained 0.8 per cent, 0.9 per cent and 8.3 per cent during the last trading week.

Higher investor confidence may also help large-cap stocks improve, such as banks, insurers, as well as food and beverage producers. Those firms include Vietcombank (VCB), the Bank for Investment and Development of Viet Nam (BID), insurer Bao Viet Holdings (BVH), dairy firm Vinamilk (VNM) and food producer Masan Group (MSN).

Improved investor confidence is also expected to bolster market liquidity, which dropped on a regular basis during the last week before Tet as investors held onto their cash and did not make further investments in stocks.

During the final trading week, an average 114 million shares were traded each session, worth VND1.6 trillion ($70.5 million), a decrease of one-third in both trading volume and trading value from January's last trading week.