Short-term profits may pull stocks back

Trading session at BIDV Securities Co. Short-term profit taking may pull stocks back from last week's gains. - VNA/VNS Photo Tran Viet

Local shares had an amazing trading week, beating previous forecasts as they bounced back from a one-month low and a series of volatile trading days to a three-week high at the end of the week.

The benchmark VN Index on the HCM Stock Exchange on Friday fell 0.7 per cent to close at 655.71 points from a four-day rally of 5.2 per cent. The southern market index rose 4.5 per cent from the previous trading week.

The minor index, the HNX Index on the Ha Noi Stock Exchange, inched down 0.1 per cent from a three-day gain of 2.8 per cent to finish last week at 83.13 points. The three-day increase helped the northern bourse climb 2.5 per cent in a week.

Local shares recovered quite well last week as investors tried to swoop in on blue chips and speculative stocks that had fallen to attractive price levels on low investor confidence and a lack of business information.

"Strong purchasing would boost the market in the short term as last week's trading liquidity increased strongly from the previous three week's average one," Sai Gon-Ha Noi Securities Corp (SHS) wrote in its report.

Investors last week exchanged nearly 155.4 million shares in each session, worth nearly VND2.74 trillion (US$121.7 million).

"Such good runs made investors worry about the stability of the market and could encourage them to protect their money by selling out stocks to earn short-term profits," said Bui Nguyen Khoa, head of macro-economic market at BIDV Securities Corp.

"The VN Index may need one or two falls this week to strengthen the current level, and the testing target now is 680 points," Khoa said.

Dairy firm Vinamilk (VNM), steel producers, auto traders and other blue chips were the ones that attracted investors, resulting in a high trading liquidity last week. Those stocks ended lower on Friday and may extend losses this week. VNM on Friday edged down 0.6 per cent after a seven-day gain of 11 per cent, in which the share reached its highest share price ever of VND169,000, driving the market up.

Two leading auto traders, Hoang Huy Investment Service Corp (HHS) and Hang Xanh Motors Service JSC (HAX), closed down 1.6 per cent and 0.9 per cent after rising 12 per cent and 15 per cent in the previous two-three trading days.

Meanwhile, speculative stocks such as TMT Motors Corp (TMT), another big auto distributor, Hoang Anh Gia Lai JSC (HAG) and its subsidiary Hoang Anh Gia Lai International Agriculture JSC (HNG) have soared more than a quarter during the week, and they could run into profit taking in the coming days.

Steel producers such as Hoa Sen Group (HSG) and Hoa Phat Group (HPG) dropped 1.9 per cent and 0.4 per cent from a five-day and three-day rally of 10 per cent and 7.5 per cent.