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Thursday,  Dec 14,2017,15:14 (GMT+7)

Energy stocks seen driving up market further

Phuong Thao
Monday,  Dec 4,2017,16:55 (GMT+7)
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Energy stocks seen driving up market further

Phuong Thao

HCMC – The energy sector is expected to send the VN-Index rising further after the Ministry of Industry and Trade announced a retail power price hike last Thursday.

In Decision 24, the Prime Minister approved a retail electricity price rise by 6.08% to VND1,721 per kWh, effective from December 1. The decision comes in the lead to the traditional Lunar New Year holiday, or Tet, which falls in mid-February next year.

According to Viet Capital Securities Company, even though the price hike will leave no short-term impact on energy stocks, this is a positive step in the process of liberalizing the power market.

“We note that PetroVietnam Power Corporation’s initial public offering is expected in the first quarter of 2018, followed by Vietnam Electricity Group’s Genco 3 later in the year. The higher electricity price also supports the Government’s efforts to attract foreign direct investment for new power plants, thereby addressing the risk of future electricity shortages,” the brokerage said in a recent report.

The decision should also ensure the operation of the competitive wholesale generation market from 2019 onward, which benefits REE and NT2 as well as other power stocks, it said.

Last Friday, the VN-Index bounced back from Thursday’s loss and closed up 1.1% to a 10-year high of 960 points,. For the week, the index rose 2.6% and has soared 44% since early this year.

Dairy firm VNM led the gainers, contributing five points to the VN-Index rise amid heavy foreign buying. GAS, a leading oil and gas enterprise, rose 2.6% as the price of Brent crude oil rallied to above US$63 per barrel in Asian trading.

Infrastructure developer CII climbed 4.7% after it announced it would sign a contract with Hong Kong Land on December 12 to jointly develop a 3.5-hectare land lot in Thu Thiem new urban area in HCMC’s District 2 after a memorandum of understanding was signed in July.

Maybank Kim Eng Securities Company predicted the VN-Index would hit 1,000 points this week, a threshold that may boost investor sentiment.

The market may turn volatile as selling pressure will remain high. However, buyers are expected to stay active and foreigners may continue buying given the recent rallies.

Last week, foreign investors net bought over VND1.8 trillion of shares, with VND1.5 trillion on the HCMC exchange and VND247 billion on the Hanoi market.

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