July to be a hard month for Vietnamese shares

Vietnamese shares are expected to struggle in July as corporate earnings will be dampened.

The local market has stalled in the last two weeks after the benchmark VN-Index on the Ho Chi Minh Stock Exchange climbed to a four-month high of 900 points on June 10.

The benchmark index had gained 36.36 per cent from the three-year low of 660 points in late March. But from the four-month peak, the index has lost 5.33 per cent in two weeks.

In comparison, US stock indices S&P 500 and Dow Jones declined by 6.91 per cent and 9.27 per cent, respectively, from their four-month highs in the same period.

On both markets, individual investors have played the key role driving stock indices up as global stocks hit rock bottom in late March on worries about the recession caused by the COVID-19 pandemic.

The pattern of the VN-Index is quite similar to that of the US stock indices in the last two weeks, which indicates the US market is taking a toll on the Vietnamese market.

Last week, the VN-Index fell 1.91 per cent to finish at 851.98 points.

The Vietnamese stock market was affected by US stocks as investors worried about the second wave of coronavirus given the easing of travel restrictions and re-opening of some states, according to Sai Gon-Ha Noi Securities Co (SHS).

The total number of coronavirus cases in the world exceeded 10 million as of 3am on Sunday and the death toll was nearly 500,000, according to Worldometer. The US-led the board in both total cases (more than 2.58 million) and total deaths (nearly 128,000).

Aside from the worldwide spread of the coronavirus, investors are also worried about another stage of the trade war as the economic relationship between the US and China has deteriorated in recent weeks.

Such concerns have made international economic and financial institutions such as the International Monetary Fund (IMF) and Federal Reserve deliver bad forecasts for global economic growth this year.

Besides the impact of US stocks, investors in Viet Nam are entering the time in which corporate information is limited. As most listed firms have organised their annual shareholders’ meetings, attention now will turn to second-quarter earnings reports.

Some large-cap companies such as dairy producer Vinamilk, steel producer Hoa Phat, Vietcombank, HDBank, retailer Mobile World Investment, petrol firm Petrolimex, Techcombank and VPBank have already released their earnings for the second quarter.

There are some positive signals in those firms’ second-quarter earnings reports but they generally are not too optimistic about this year’s performance.

“Second-quarter earnings season will start in July, so investors will be divided on companies’ reports,” Sacombank Securities Co. market analysis director Duong Hoang Linh said.

“Investors will no longer win easily. They will become more cautious and individual purchasing power will weaken,” he said.

The VN-Index will move sideways in July and it will not be easy for the benchmark to beat 900-point level this month, according to Phan Dung Khanh, director of the investment consultancy at Maybank Kim Eng Securities Co.

In the coming week, the VN-Index may struggle and move between 840 points and 870 points, SHS forecast.

Bao Viet Securities Co (BVSC) warned the pressure on the market still persists and the VN-Index may go down to 780-820 zone if the short-term bottom line of 840 points is broken in the coming days.