Gains may extend, but volatility is forecast
After suffering for nine consecutive sessions, strong rebounds of the benchmark VN Index last week raised hopes for a short-term recovery with forecasts predicted to touch 940-950 points this week.
But the news also came with a warning, as trading could be volatile.
The benchmark VN Index on the Ho Chi Minh Stock Exchange (HOSE) gained 1.86 per cent to close last Friday at 924.86 points, making a weekly growth of 2.67 per cent.
The southern market index had surged 2.93 per cent last Wednesday to end its nine-day decline of total 8.53 per cent, which pushed the benchmark to its 16-week low of 888.69 points.
The minor HNX Index on the Ha Noi Stock Exchange gained 2.30 per cent to end at 105.75 points. The northern market index increased by 3.89 per cent in total last week.
The strong recovery of the market was attributed to positive signals from China-US trade talks, outstanding domestic companies’ third-quarter earnings reports and expectations for Government’s ownership cut in some State-controlled banks.
The main driving stocks of the market last week included Bank for Investment and Development of Vietnam (BIDV), and property developer Vingroup’s retail business Vincom Retail and high-end real estate firm Vinhomes.
BIDV shares, listed as BID on HOSE, run up a total of 17.6 per cent in the last three sessions and made up a weekly gain of 6 per cent.
Shares of Vinhomes and Vincom Retail, listed as VHM and VRE on HOSE, have advanced 10.7 per cent and 3.8 per cent during the week.
Along with the market upturn, trading was also volatile with an average of more than 215 million shares being traded in each session of last week, worth VND5.25 trillion (US$233.4 million).
The figures were higher than the previous week’s numbers of 209.7 million shares in volume and VND4.3 trillion in value.
According to BIDV Securities JSC (BSC), the market has the chance of a short-term recovery this week and it is forecast to hit above the 940-point level.
“Despite the market’s short-term positive outlook, local stocks would be strongly differentiated from each other” and investors may stay quiet to preserve their portfolios from potential risks, BSC said in its weekly report.
“Investors are becoming more optimistic about the market’s short-term uptrend” and “cash inflows are expected to actively run into the market and have equal influence on local stocks,” Bao Viet Securities JSC (BVSC) said.
But in the short term, after a bullish Friday session, the VN Index may suffer from volatility and retreat early this week, dropping to its 917-920 support zone before moving upwards to 940-950 points, BVSC added.
There was a high chance of the market to continue recovering this week as some large-cap stocks had already fallen too much in the previous three weeks, making their values more attractive to investors, according Nguyen Trung Du, director of services division at VNDirect Securities JSC.
But investors should wary of possible risks, which may come from both European and Asian markets, along with a stronger US dollar, decline of oil prices and increasing dong-based interest rates, he said.
Banks take the lead
BIDV shares strongly advanced last week but the growth was much more about the bank’s plan to sell shares to the South Korea-based KEB Hana Bank, which only benefited the Vietnamese bank not the whole banking sector, according to Hoang Thach Lan, head of individual investor division at Rong Viet Securities JSC (VDSC).
“What could really boost bank shares at the moment are their earnings reports and year-end earnings prospects,” he said, adding that bank stocks had fallen sharply in the last one month, bringing more chances for investors.
For example, Vietcombank shares had lost 9.6 per cent in one month, BIDV shares had dropped 10.4 per cent, Vietinbank shares had declined by 13.3 per cent and MBBank shares had shed 4.8 per cent, Lan said.