HÀ NỘI – Vietnamese shares may advance in 2017, analysts say, cautioning that market conditions can get volatile with international events of 2016 continuing to exert unpredictable impacts on Việt Nam.

Both market indices ended 2016 on a positive note, helping them advance over 2015’s closing levels.

The benchmark VN Index finished 2016 at 664.87 points, up 14.8 per cent over 2015. The southern market index had been forecast to reach 680 points by the end of the year.

The HNX Index on the Hà Nội Stock Exchange closed at 80.12 points, almost unchanged after a year.

Some analysts say 2017 will be the year that the benchmark VN Index will tip new highs on prospects of stable macroeconomic growth and investor confidence bolstered by positive international market conditions.

“We expect that the market will grow with increases in score levels, market liquidity and capitalisation in 2017” because “the macroeconomic conditions are stable, GDP growth improves and companies will likely make more earnings,” said Lê Nguyệt Anh, ACB Securities Co’s head of market analysis.

“Businesses with higher earnings could be those in real estate, consumer and banking sectors while energy firms’ profits will move sideways or grow slightly compared to the drop in 2016.”

The future is bright for energy stocks after the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC producers in mid-December reached an agreement to cut output levels in order to stabilise the oil market and lift crude prices.

US crude West Texas Intermediate finished 2016 trading at US$53.72 a barrel, up 100 per cent from its 13-year low of $26.21 on February 11. Brent crude also doubled to close at $56.82 a barrel.

Ngô Thế Hiển, deputy head of market analysis at Sài Gòn-Hà Nội Securities Co (SHS), said that the stock market in 2017 will move in a positive direction because the country’s economic growth for 2017 is seen higher than last year, the regulatory system will be improved and new products such as derivatives and covered warranties will be introduced.

The listing and equitisation of large-cap State-owned enterprises and private corporations will also bolster investor confidence in 2017 as they will find trading opportunities for high-quality products when they are available on the stock market, according to analysts.

“The listing of SOEs and private companies will raise market capialisation, offer more trading opportunities and help investors improve their understanding and analysis of different sectors in the economy, especially when those newly listed companies are large-cap and have big effects on their industries,” said analyst Hoàng Thạch Lân.

Those companies would make local stocks more attractive to institutional and foreign investors, and raise the average level of share prices like it happened for the KiDo Group, Sacombank and dairy producer Vinamilk in the past, he said.

“A lot of newly-traded companies, such as Sài Gòn Beer-Alcohol-Beverage Corporation (Sabeco), are priced 15-20 times the market’s average price but still attract foreign buying,” Lân said. “Those firms have great development potential as they have comparative advantages in market shares, business scales and market coverage.”

2016’s reach

But analysts also warned that the impact of international events happening in 2016 has remained unpredictable and could affect the local stock market in negative ways.

“The local stock market could suffer from some of the international events, which have not been evaluated accurately,” said Hiển, senior analyst at SHS.

For example, the increases of the US interest rates could trigger more foreign selling, the socio-economic conditions in Europe and unpredictable policies of Donald Trump’s administration could affect Viet Nam’s policies.

“Investment will not flow into all local stocks across the market like it did in 2016, in fact, it will be decentralised in some particular periods and concentrated in the sectors with high growth prospects.”

Meanwhile, the listing of large-cap companies will make investors distracted and dilute the money flow, thus making the stock market more volatile in some specific periods, Hiển added.

Good first week

The first trading week of 2017 will be positive, according to analysts, as investors count on companies doing well when their fourth-quarter and whole-year performance reports are released.

“Investors are preparing for companies to publish their financial reports,” analyst Lân said. “As usual, good news will come first, then the bad news, so the market will see large-cap companies advance in short term to boost market sentiment.”

“The industries that could improve in the near future based on their performances in the past quarter are in building materials production, plastic and rubber, food and beverages, textile and garment, electronics and property sectors,” he added. – VNS