VN markets may decline after gains: analysts

Investors at Sai Gon Securities Inc. Local market indices are expected to decline this week as investors may take profits after stocks' hot gains. - VNS Photo Viet Thanh

On Friday, the benchmark VN Index on the HCM Stock Exchange edged down 0.4 per cent to finish last week at 658.68 points. The southern market index ended up 2.9 per cent over the week, finishing higher than previous analysts' forecasts.

The HNX Index on the Ha Noi Stock Exchange fell 0.7 per cent to end Friday at 87.57 points, retreating from a five-day rally of 4.1 per cent. The northern market index rose 2.8 per cent from the previous trading week.

Nguyen Ngoc Lan, senior analyst at Agribank Securities Corp (Agriseco), said local markets would decline this week as profit-taking could continue and global markets remained volatile.

"However, the decline is not especially significant, as investors may rotate their investment portfolios among listed companies," she said.

Le Duc Khanh, head of the investment strategy division at Maritime Securities Inc, noted that markets would head down in the first three days, before returning to positive territory during the rest of the week.

Hoang Thach Lan, a securities analyst, said the markets had increased because they had been too "hot" since June 24. During this period, the price-to-earning (P/E) ratio in some blue chips in the VN30 basket, displaying the largest 30 listed companies in terms of capitalisation and trading liquidity, reached above 20.

Investors might also seek profits in those large stocks when the companies announce their profits for the second quarter. Those stocks would not be able to receive support from foreign investors, as they already hit the limit of foreign ownership, he added.

Stocks that made significant gains last week included Tien Len Steel Group JSC (TLH), Dream House Investment Corp (DRH) and Viet Nam Construction and Import-Export Corp (VCG). These stocks soared 31 per cent, 24 per cent and 28 per cent, respectively, during the week.

Meanwhile, pharmaceutical businesses, such as Traphaco JSC (TRA), Domesco Medical Import-Export JSC (DMC) and DHG Pharmaceutical JSC (DHG), also recorded large gains in recent weeks and could run into profit-taking in the future.

Investors should also watch for energy stocks, which could be affected by lower oil prices. London-traded Brent crude on Friday finished up 0.8 per cent at US$46.76 per barrel, though it plunged 7.1 per cent during the week.

"This week, investors may count on banks and securities firms," said Nguyen Ngoc Lan, Agriseco's analyst.

Bright spots

Profits for securities firms in the third quarter might increase strongly, as market trading liquidity remained high in recent weeks, she said.

Last week, market trading liquidity increased significantly from the previous week. The market's daily average trading volume was more than 210.6 million shares, worth VND4 trillion ($179 million), 37 per cent higher in volume and 36 per cent higher in value.

Securities stocks that investors might take a look at included Sai Gon Securities Inc (SSI), HCM City Securities Corp (HCM) and VNDirect Securities Corp (VND).

The Joint Stock Commercial Bank for Foreign Trade of Viet Nam (VCB) will also be a factor that helps drive markets up, according to Chau Thien Truc Quynh, Viet Capital Securities Corp's analyst.

"VCB will provide gains on expectations that the bank will offer support for the Government in case the domestic financial system has problems," Quynh said.