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Shares seen declining this week - experts

Phuong Thao
Monday,  Jun 12,2017,23:47 (GMT+7)
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Shares seen declining this week - experts

Phuong Thao

HCMC – A slight correction is expected this week as the VN-Index of the HCMC bourse fell to below the new resistance level of 750 points last Friday, according to securities experts.

The VN-Index traded sideways on Friday, closing down less than a tenth of one percent at 749.72. After reaching a fresh nine-year high on Wednesday, the index pulled back but still rose 1.5% in the week.

Technical indicators suggest that the market is entering a short correction phase with the VN-Index hovering in a narrow range of 740 and 750 points, said Le Duc Khanh from HCMC Securities Corporation (HSC).

Since early this year, the main index is projected to ease slightly, having climbed to new highs, from 770 to 800 points. This week is rife for a correction, he was quoted by the stock market news website tinnhanhchungkhoan.vn as saying.

Nguyen Ngoc Lan, head of brokering services at Agribank Securities Company (Agriseco), also predicted the market would correct this week but a strong drop is unlikely.

The market retreated in the last two sessions of last week, showing a dampening of investor sentiment. Speculative stocks may drop further this week after their recent strong gains while securities firms have reduced margin lending at these firms.

This week, portfolio restructuring by two exchange traded funds may impact the market, with ROS to be bought heavily and other large caps sold. However, cash could still stay on the market and the VN-Index could move between 740 and 745 points.

Regarding a rate-setting meeting of the U.S. Federal Reserve (Fed) on June 13-14, Khanh of HSC said U.S. economic growth is slowing down, making it difficult for the Fed to make a decision this time after the recent interest rate hikes.

If the Fed raised the rate in December 2016, another rate hike this month would not be surprising, Khanh said.

Any Fed rate decision often has implications on Vietnam’s interest and exchange rates. The stock market will see a correction in near term as investor sentiment is down and foreign trading is lackluster.

Lan of Agriseco said the Fed would raise the rate at its upcoming meeting even though economic data in the U.S. has been disappointing of late.

 In the medium and long terms, interest and exchange rate risks would be low as the Government of Vietnam has been controlling these two factors well.

If there is no Fed rate spike, the market would respond depending on global market movements, the expert said.

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