HÀ NỘI – Vietnamese shares may continue to fall this week as local markets have not understood fully how Britain’s vote to leave the European Union (EU) could affect Việt Nam’s economy, threatening to pull down investor confidence, securities analysts warned.

The benchmark VN Index on the HCM Stock Exchange on Friday closed down 1.8 per cent to finish at 620.77 points, the lowest level in the last three weeks. The southern market index at some point during Friday also erased all gains that had been made since the beginning of the year.

The HNX Index on the Hà Nội Stock Exchange lost two per cent to end at 83.62 points, the steepest fall since January. The northern market index pulled back from a four-day rally of 1.7 per cent and erased all progress achieved in the last 2.5 weeks.

“I’m looking forward to seeing responses from the global financial markets, including the United States, the largest central banks in the world, and from our central bank,” Trần Minh Hoàng, Vietcombank Securities Corp’s (VCBS) head of market analysis division, said.

Việt Nam’s exports to the EU and Britain such as textiles and garments, footwear and seafood industries will face strong competition from European and British products as the British pound and EU’s euro have weakened recently, Hoàng said.

Britain’s exit from the EU may encourage other EU nations to do the same, Phan Dũng Khánh, MayBank KimEng Securities Corp’s (MBKE) head of investment department, said. That will bring chaos in Europe, affecting the region’s security, finance and politics.

“Investors have been trying to withdraw from stocks, and purchase other safe assets such as gold and the American dollar, as they are afraid of possible future risks,” Dũng said.

In the international market, gold jumped four per cent to rise above US$1,300 per ounce. Vietnamese gold companies also raised gold prices; for example, each tael of the Sài Gòn Jewellery JSC reached a value of VNĐ35.9 million ($1,600), before closing between VNĐ35.2 million and VNĐ35.5 million, an increase of 3.8 per cent to 4.7 per cent over Thursday’s values.

Rising opportunities

In the gloomy scenario, investors found some positive points in Britain’s vote to leave the EU.

“It could take two years for Britain to leave the EU officially, as the two sides need to complete required agreements and procedures to ensure Britain’s exit will not have a huge impact on their economic and social conditions,” Trần Minh Hoàng, VCBS’ analyst, said.

Global investors expect the United Kingdom’s breakup with the EU will have a gradual, and not a damaging impact, on the global economy.

The Việt Nam-United Kingdom trade value comprises only a small part of the Việt Nam–EU trade value. Thus, the Vietnamese economy will not suffer much from the event, Nguyễn Nhật Cường, Vietinbank Securities Corp’s (VietinbankSC) deputy head of investment division, said.

Investors should look at local steel producers and energy firms as steel and oil prices improved in recent weeks, and were expected to boost these companies’ earnings, Cường said.

Additionally, listed companies that benefit from weaker sterling and euro may be good choices for investors as their financial costs and loans based on these two currencies would fall, MBKE analyst Phan Dũng Khánh said.

Among these firms, PetroVietnam Power Nhơn Trạch 2 JSC (NT2), Hà Tiên 1 Cement JSC (HT1) and Bỉm Sơn Cement JSC (BCC), respectively, recorded euro-based loans of 113 million euros ($125.6 million), 63 million euros and 38 million euros.

Dũng said companies were about to report their earnings for the second quarter. Investors should look at them and make good decisions to purchase those with better quarterly performances.

The first two large listed firms that announced May’s earnings last week are information and technology developer FPT Corp (FPT) and cell-phone retailer Mobile World Corp (MWG). They both had higher earnings in May, compared with April and the same period last year. – VNS