Investors advised to stay cautious
HCMC – Securities enterprises have advised investors to take caution because market turnover has soared in recent times, leading to a possible deep correction in near future.
Nguyen Hong Khanh, head of analysis at Sacombank Securities Company, said that steel stocks attracted a large amount of capital in 2016 with most investors obtaining positive earnings. This year, construction and real estate firms have drawn the most attention alongside stocks in the banking, rubber, services and petroleum sectors.
Many stocks have bounced back and strongly attracted investment such as TTF, OGC, FLC and ITA. Market turnover has doubled in a short period, suggesting high margin ratios and possible correction. Therefore, investors should be cautious, Khanh was quoted by tinnhanhchungkhoan.vn as saying.
Chau Thien Truc Quynh from Viet Capital Securities Company classified the current favorite stocks on the market into three groups. The first includes State-owned and large companies like Petrolimex, VEAM and Thaco that are going to list on the official exchanges. These stocks grow fast but expose high risks as the listing dates remain unknown.
The second group is newly-listed outstanding firms like VJC and the third includes speculative stocks expected to be picked by exchange traded funds (ETFs) such as ROS, DXG, HBC and CII. The stocks often rise sharply before ETF quarterly rebalancing but they suffer strong selling pressure upon official announcements of portfolio restructuring results.
After hovering just below a nine-year high last week, the VN-Index fell 0.5% on Friday at 712.21, ending the week down slightly for a consecutive second week of losses. GAS dropped 4.8% during the week to a 10-month low after Brent crude prices had extended a two-day 6.8% pullback in overnight trading.
Van Eck Vectors Vietnam ETF (VNM ETF) last week announced it will add NVL with a ratio of 7% to its MV Index Solutions while removing ITA, whose weight was 1.62% on March 9. Listed on the HCMC in late 2016, NVL had jumped 13% at VND68,000 each share last Friday with trading volume averaging out at 1.3 million shares each session.
The combined weight of Vietnamese stocks in the portfolio was reduced to 73.32% compared to 76.78% at the previous rebalancing period, prompting VNM to sell 3.3% this week.
According to vietstock.vn, the ETF is expected sell US$4.64 million worth of ITA shares, US$2.96 million of SSI shares and US$2.85 million of BVH shares. Meanwhile, it would buy US$20.02 million worth of NVL shares, US$1.83 million of VNM shares and US$230,000 of VIC shares.