VN Index expected to rise this week

31-Jul-2018 Intellasia | The Saigon Times | 6:02 AM Print This Post

Having moved sideways last week, the VN Index of the Hochiminh Stock Exchange is likely to rise slightly this week on the forecast that investor confidence will pick up on positive business prospects of listed firms.

The VN Index rose 5.36 points, or 0.57 percent, at 935.52 last Friday. Trading value on the HCM City market remained moderate at nearly VND3.7 trillion.

Stocks moved broadly sideways last week, falling 0.5 percent amid a drop in volatility as the market moved less than a percent each day. The index has retreated in six of the last seven weeks.

Since April, stocks have come under pressure due to fears of a US-led trade war and of the dong devaluation. On Wednesday, US President Donald Trump came to an agreement with the President of the European Commission to ease trade tensions.

Furthermore, the State Bank of Vietnam injected more than $2 billion into the banking system in the six days leading up to July 20 to support the dong and, in fact, the greenback did weaken. However, the stock market was indifferent at the information, making modest moves on sluggish trade during the week.

BIDV Securities Company in a report said the stock market had reached its short-term balance point at 930 points. Large-cap stocks were still the main drivers of the market and directly affecting the indexes, including prominent names like retailer VRE, brewery company SAB and property developer VIC.

Bank stocks were the strong supporters of the market during last week’s trading. Therefore, they are still worthy investment channels this year.

VNDirect Securities Company said large-cap stocks, mainly banks, will draw most investor attention and are expected to gain impressive profits in 2018.

In a positive scenario, the VN Index could move towards 1,000 points in the short term, as listed firms may launch new business schemes to meet profit targets for this year. Otherwise, the main index may just make sideways movement if cash flow is not strong enough to support the uptrend.

The brokerage firm also noted that a significant part of the cash flow has turned to speculative mid-cap and small-cap stocks as investors are seeking short-term profit.

Currently, the VNMidcap and VNSmallcap indexes are also performing well. Therefore, in the scenario of a rising market this week, speculative stocks will have the opportunity to increase.

Besides, companies with good business prospects and attractive dividend payment plans in the second quarter will attract cash flow, especially those operating in the sectors of securities, real estate, retail and aviation services, the firm added.

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Category: Stocks, Vietnam

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