Stock losses seen extending on global uncertainties
HCMC – Securities experts have predicted the market will stay bearish early this week as global political uncertainties would make investors cautious.
Phan Dung Khanh, head of investment advisory at Maybank Kim Eng Securities Company, said stocks retreated to an important supporting zone last week. The current international news headlines are pointing to market downsides while domestic news and cash flow remain fine.
Foreigners still maintain net buying and liquidity stays high. Therefore, a recovery would be possible if the Syria situation changes for the better.
The annual general meetings season is taking place with many enterprises announcing positive earnings results for last year and ambitious strategies for 2017. Last week’s bad news may send stocks down further early this week but the last sessions are expected to be better, Khanh was quoted by the stock market news site tinnhanhchungkhoan.vn as saying.
The VN-Index plunged as much as 1.4% in the morning phase last Friday before recovering in the afternoon to close down 0.81% at 718.45. Growing tension between the U.S. and North Korea caused losses in most Asian markets.
According to Viet Capital Securities Company (VCSC), there was no panic selling despite the news. The KOSPI fell just 0.6% while equity indexes in Thailand and the Philippines rose.
After the U.S. had launched missile strikes against Syria a week earlier, geopolitical tensions continued to escalate last week as North Korea hinted at a “big and important event” in front of 200 international journalists as it celebrated the 105th birthday of its founder -- Kim II Sung, the late grandfather of North Korea’s current leader, while the U.S. warned it may launch a strike against North Korea. The region then heated up further as the U.S. dropped its largest non-nuclear bomb in Afghanistan.
Action in the local market reflected a broad-based selloff led by large cap names. The five largest listed companies by market capitalization, VNM, SAB, VCB, VIC and GAS, all fell between 0.5% and 1.5%. The main index slumped 1.3% last week, breaking a three-week uptrend for its worst week since December, VCSC commented.
Tran Xuan Bach from Bao Viet Securities Company’s strategy department said the Vietnam market saw more negative developments than regional exchanges because investors were trading at a high margin ratio. Sentiment was fragile and profit taking built up given a market recovery since early this year.
This week, market developments will depend on global events, especially nuclear weapon tests in North Korea. However, given domestic news and no unexpected factors, technical signs suggest a possible rebound at the middle or the end of this week, the expert said.