Market short-term outlook remains negative

Vietnam’s benchmark VN-Index on the Ho Chi Minh Stock Exchange inched up 0.12 per cent to finish last week at 898.19 points, decreasing 1.76 per cent on a weekly basis.-VNA/VNS Photo

Vietnam’s benchmark VN-Index on the Ho Chi Minh Stock Exchange inched up 0.12 per cent to finish last week at 898.19 points, decreasing 1.76 per cent on a weekly basis.

The HNX Index on the Ha Noi Stock Exchange gained nearly 2 per cent on Friday to end at 103.01 points and closed last week level.

The local stock market underwent a volatile trading week as investors remained cautious on a shortage of supportive news, the potential risks of China-US trade tensions, and worries about further Fed rate hikes.

Caution among investors resulted in weak trading liquidity with an average of 189 million shares traded on the two local exchanges in each session, worth VND3.93 trillion (US$174.6 million).

There was big differentiation among group stocks and they took turns to help prevent the market indices from falling further during the week.

Weighing on the markets were property developer Vingroup (VIC) and its sub-unit Vinhomes (VHM), dairy producer Vinamilk (VNM) and consumer holding firm Masan (MSN).

In contrast, banks and energy firms made gains to offset the underperformance of food and beverage and real estate stocks.

VPBank (VPB) and HDBank (HDB) soared on Friday after their top officials and relatives announced plans to buy back shares, up to 21.5 million in total.

In addition, a three-day increase of oil prices helped boost local petroleum stocks such as PetroVietnam Gas (GAS), PV Drilling and Well Services (PVD) and PV Technical Services (PVS).

Foreign net selling remained a threat to the stock market as foreign investors posted VND1.22 trillion worth of sales on the two local exchanges.

“Investors remained cautious with concerns about the possibility of the market’s short-term downtrend,” Bao Viet Securities JSC (BVSC) said in a note.

Such caution made the market move sideways with high differentiation among stock groups and resulted in moderate trading liquidity, BVSC said.

Amid these negative signs, buying demand at low price ranges began to rise in some battered stocks such as bank and steel, boosting the market performance, the company said.

The latest rise was a short-term technical recovery only and the benchmark index was seeming to experience more fluctuations after approaching the 905-point level, BVSC added.

The benchmark index was forecast to test itself against the bottom line of 889-895 points this week but it was hoped it would rebound a bit from this level, BVSC said.

According to Phan Dung Khanh, head of the investment division at Maybank KimEng Vietnam Securities Corporation, the market’s recovery may be short-term and technical because investors were unwilling to buy in local stocks and were waiting for clearer signals from the market.

“The Vietnamese stock market’s movement is highly connected to that of the US stock market,” Khanh said, adding that even good news would not lift trading liquidity at the moment.

The Fed’s tightened lending policy would lure dollar-based capital back to the US, putting pressure on Vietnam’s exchange rate policy, he said.

Deepening trade tensions between the US, China and other economies would force the Chinese government to depreciate the yuan to support Chinese exports, and basically, that would make other economies de-value their currencies to compete against the Chinese, Khanh added.

“The VN-Index may retreat back to 850 points or lower, then there will be good technical recovering sessions,” he said.