Stock volatility expected this week

Hanoi (VNA) - Shares are expected to decline further this week as investors seek profits from a 10-year high, but the decline will not be heavy as foreign investments and first-quarter performances will boost investor confidence in listed companies.

Vietnam’s benchmark VN-Index on the HCM Stock Exchange edged down 0.2 percent to finish at 722.31 points on March 31. The major index gained total 0.7 percent in the previous two sessions.

The HNX-Index on the Hanoi Stock Exchange lost 0.3 percent to close at 90.82 points on March 31. The northern market index retreated from a two-day increase of 0.6 percent.

The March 31’s falls ended a sideway weekly move for the two local exchanges compared to the previous week’s closing level of 722.14 points for the VN-Index and 91.37 points for the HNX-Index.

Market trading liquidity declined from the previous week, with an average of more than 258.4 million shares being traded in each session, worth 4.43 trillion VND (194.38 million USD).

The VN-Index had mainly struggled to stay in the range of 715-720 points in March, according to Chau Thien Truc Quynh, head of the brokerage division at Viet Capital Securities Company.

“As the benchmark index met strong resistance at that range, the signal of short-term correction has appeared, and the stock market will decline in the next two or three weeks.”

The short-term support level for the VN-Index is 717-722 points, for the HNX-Index 90.5 point and the stock indices will test these levels in the first trading days of this week, she added.

However, the stock market is still an attractive channel for investors, Quynh said. At the end of the first quarter, the average trading value on the two local exchanges was 3.56 trillion VND in each session, an increase of 27 percent compared to last year’s same period.

Stocks will correct on a technical basis in the next two weeks rather than declining sharply, said Phan Dung Khanh, a senior manager at Maybank Kim Eng Securities Company.

The stock market will continue to attract investment as macroeconomic conditions are positive, interest rates have been reduced and other assets like gold and foreign currencies become less attractive, he said.

Domestic and foreign investment has remained strong, spreading around all sectors in the market, Khanh added. Foreign investors last week recorded a net buy value of 855 billion VND, 12 percent lower than the previous week’s figure.

In addition, listed companies, especially large-cap ones, have released their earnings reports for the first quarter, which have been better than expected and will boost investor confidence, he said.

According to analysts, the sectors that could be attractive to investors this week include steel, banks and construction and property firms.

Steel producers such as Hoa Phat Group (HPG) and Hoa Sen Group (HSG) will benefit from the latest decision of the industry and trade ministry regulating anti-dumping tax on imported steel products from China and the Republic of Korea. The new decision will take effect on April 13 and be valid in the next five years, promising to boost performance of local steelmakers.

In the banking sector, Sacombank (STB) will be the centre of attention over speculations on the bank’s restructuring plan. Vietnam’s property giant Nova Group has proposed to the central bank to purchase 20 percent of Sacombank’s capital to participate in the restructuring of the HCM City-based bank.-VNA