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VN shares likely to continue decline this week

Update: September, 07/2015 - 07:50

Vietnamese shares went through a rough correction last week, after seeing a sharp improvement in the previous week, as little information of substance in both domestic and global markets encouraged investors to sell shares to see short-term profits. — VNS Photo Truong Vi

HA NOI (VNS) — The Vietnamese stock market will continue its correction this week, although it made a gain in last week's final session, as investors expect to be cautious regarding global market movements.

As a result, according to a report written by Maritime Bank Securities (MSBS), the benchmark VN Index will have to test the 540-545 point range, and investors should hold on to current investments as the market is not likely to show strong improvements this week, MSBS noted.

Vietnamese shares went through a rough correction last week, after seeing a sharp improvement in the previous week, as little information of substance in both domestic and global markets encouraged investors to sell shares to see short-term profits.

Last week, the southern VN Index and the northern HNX Index dropped 2.5 per cent to close at 556.81 points and 76.32 points, respectively.

Additionally, 21 of the 23 industries on the stock market declined from the values they earned in the previous week. The agriculture-forestry-fishery sector and insurance sector were the two strongest decliners, with a decrease of 8.2 per cent and 6.3 per cent, respectively.

The volatility of global oil prices was one of the main reasons for the market being dragged down last week, especially for energy firms, after they were the major force that boosted the market in the previous week.

According to Bloomberg, the benchmark West Texas Intermediate (WTI) crude fell 6.4 per cent last week to close at US$46.05 per barrel, after hitting a one-month peak of $49.2 per barrel on August 31.

Brent crude also followed the same development trend, as it finished last week at $49.61 per barrel after reaching a one-month high of $54.15 per barrel on Monday.

At the end of the week, the energy sector had lost 6.08 per cent of its value.

In this sector, Petrovietnam Gas Corp (GAS), Petrovietnam Drilling & Well Services (PVD), Petroleum Technical Services (PVS) and Petrovietnam Coating Co (PVB) in turn lost 8.2 per cent, 7.9 per cent, 5.5 per cent and 9.2 per cent.

The brokerage Sai Gon-Ha Noi Securities (SHS) said that the energy sector would likely maintain its downward trend as global oil prices continue decreasing this week.

Of note, the crudes continued decreasing, as the Chinese economy was believed to extend its decline more sharply, while oil exporters, such as the US, Russia and OPEC members, would not cut production to protect their market shares, SHS said.

In addition, investors on the Vietnamese stock market were quiet after decree 60 took effect on Tuesday, as the new decree proved not to be clear enough to help investors and listed companies raise foreign ownership capital.

As a result, market trading was more than 554.5 million shares in volume and VND8.3 trillion ($370 million) in value, being nearly half of the value of the previous week.

Moreover, foreign investors turned from net buyers, with total net buy value of VND60.2 billion ($2.67 million) in the previous week, to net sellers last week, with total sales values of VND528.5 billion ($23.5 million) due to significant changes in the global market.

Of the foreign sales value, Credit Suisse (Hong Kong) sold nearly 26 million shares, or 3.3 per cent of Hoang Anh Gia Lai Group (HAG), worth VND388.4 billion ($17.2 million), through negotiations.

Other shares that received strong selling power from foreign investors last week included Vingroup Corp (VIC), Petrovietnam Drilling & Well Services (PVD) and Petroleum Technical Services (PVS). — VNS

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