Vietnam stock market back to gloomy days: forecasts

Securities firms said gloomy days are back to haunt the local stock market after it suffered five falling weeks in a row with liquidity getting lower day after day.
Viet Capital Securities Co. (VCSC) in its report last Friday said liquidity problems in the banking system, the margin blacklist and many fraud scandals in the country put significant strain on the market last week.

“We will watch the macroeconomic environment closely, especially the October consumer price index. Although we expect a further deceleration of the CPI from September’s 0.82 percent, whether this is enough to convince investors to return the market remains to be seen,” it said.

“In our view, lending rates continue to be the most prohibitive factor to market recovery but there has been no sign of interest rates easing significantly. In fact, the central bank had to pump 9 trillion dong via OMO (open market operations) this week to support liquidity on the inter-bank market.

“The bank was also quite busy actively adjusting the official exchange rate three times this week following three similar incremental adjustments last week. Fears of the margin blacklist have largely subsided but concerns on the full impact and the aftermath of the recent scandals have risen. We remain cautious about a turnaround for the market in the short-term.”

The brokerage said it is waiting for clear buy signals before recommending increasing equity exposure. Both markets are trying to build a short-term bottom as they bounced from 407.61 and 68.75, it said, adding it is also waiting for clear buy signals in FPT, DIG and PVD as they are trading just below their buy trigger levels.

HCM City Securities Corp. (HSC) said it has seen some early indications of third quarter earnings from REE, POM, and DIG. So far there have been no surprises with general business conditions remaining quite sluggish for construction and real estate related firms.

“From this week the season will start to warm up but we remind that the fourth quarter is always the key quarter where all loose ends get tied up. So, we expect the earnings season to have a fairly neutral impact on the market overall although companies such as PNJ may post some positive surprises,” HSC added.

The Hanoi market gained 2.31 points, or 3.23 percent, against the previous week to 76.19 with three falling and two rising sessions. The market’s daily trading volume averaged out at nearly 29.9 million shares worth nearly 304.9 billion dong, both falling by over 11 percent from the week earlier. The market is predicted to drop slightly this week.
Saigon Times Daily

Tags: vietnam stock, Vietnam stock market, VNindex