VN-Index forecast to face short-term resistance

Illustrative image (Source: bizlive.vn)

Hanoi (VNA) - The benchmark VN-Index will soon face resistance at 680 to 690 points, as short-term profit-taking activities are forecast to intensify early this week.

The HCM City’s market recorded a positive week with four profitable sessions. The VN-Index gained over 1.8 percent last week, to close at 679.8 points on January 6, its highest level since November 23, 2016.

On the Hanoi Stock Exchange, the HNX-Index rose 2.3 percent to hit its highest level since November 1, 2016 at 82.1 points.

Liquidity inched up on the HCM City market. The trading volume rose nearly 4 per cent over the previous week, averaging 106 million shares, worth nearly 2.3 trillion VND (101.8 million USD) per session.

Similar figures on the Hanoi exchange were 27.4 million shares and 270 billion VND (12 million USD) per session.

“The VN-Index is approaching the 680 resistance threshold where short-term trading could be considered,” Tran Hai Yen, analyst at Bao Viet Securities Co, wrote in a market report.

However, the market outlook is forecast to remain positive with the return of bank stocks as the leading factor in last week’s uptrend.

Among the eight largest listed lenders on the two exchanges, only Military Bank (MBB) and Sacombank (STB) declined, while the other six increased between 4 and 14 per cent, of which Asia Commercial Bank (SCB) was the largest gainer, with a 14-per-cent price hike.

The three highest valued banks included Vietcombank (VCB), Vietinbank (CTG) and BIDV (BID), which gained between 8 and 11 percent.

According to analysts at BIDV Securities Co (BSC), the sharp increase in bank shares last week, though unsurprising, was attributed to rumors about their positive earning prospects, while the current prices of these stocks remain fairly low.

Additionally, information about the rearrangement of a HCM City-listed bank, and other weak banks, has raised concerns over a new support policy by the central bank to speed up the restructuring of the banking system in the near future.

“If there is actually a support policy, movements of bank stocks last week could be the initial signal for a rising wave for these stocks, as happened in the first half of 2015,” BSC analysts wrote in a report.

The return of foreign investors as net buyers in the domestic market last week, accompanied by the cooling down of the US dollar in the forex market, is providing more momentum for the market’s upturn, they added.

Foreign traders were net buyers for the week on the two markets, responsible for a combined value of nearly 286 billion VND. Their buys focused on the HCM Stock Exchange with 245 billion VND, of which their disbursements concentrated on brewery giant Sabeco (SAB), with 118 billion VND, and dairy firm Vinamilk (VNM), with nearly 89 billion VND.-VNA