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Vietnam stocks set to bounce back on falling gas prices
Vietnam’s major stock market in Ho Chi Minh City today will reverse last Friday’s fall following the government’s cut in retail gasoline price last Saturday, brokers said yesterday.
The VN-Index, the country’s main stock index, closed 3.57 percent lower at 365.97 points last Friday after rising for seven days in a row. The index, which is the gauge of 163 leading firms and four closed-end funds on the
Ho Chi Minh Stock Exchange, has lost 60.5 percent this year.
An analyst from Da Nang Securities Co., who wished to be unnamed, said the world stocks’ rallies late last Friday and a 7-percent reduction in retail fuel prices will boost the domestic market today.
US stocks rallied last Friday after two days of steep losses on recession fears, despite grim data showing October unemployment spiked to a 14-year high and a hefty quarterly loss from General Motors and Ford.
The Dow Jones Industrial Average leapt 254.47 points (2.93 percent) to 8,950.26 at the market close and the tech-heavy Nasdaq rose 38.70 points (2.41 percent) to 1,647.40.
In Europe, London's FTSE 100 index of leading shares gained 2.17 percent to 4,364.96.
In Paris, the CAC 40 index rose 2.42 percent to 3,469.12 points and Frankfurt's DAX put on 2.59 percent at 4,938.46 points, recovering some ground after heavy losses Thursday of around six and seven percent, respectively. Elsewhere in Europe, Swiss stocks gained 1.41 percent, with Milan also up 1.41 percent, Madrid was up 2.29 percent, Brussels gained 1.11 percent and Amsterdam rose 1.96 percent.
In Asia, Tokyo tumbled 3.55 percent, hit by fears of a deep global recession after Wall Street plunged overnight and a profit warning from Toyota Motor Corp.
Hong Kong closed 3.3 percent higher but Sydney fell 2.4 percent, led down as mining stocks were hit by falling metals prices.
Saigon Sacombank Securities Co., the securities arm of the Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), said in a report that many listed companies on both exchanges in HCMC and Hanoi, are worth investing in now. There are many long-term investment opportunities from well-run listed firms in crucial sectors, with sound earning growth and price to earning ratio of around 5x, according to the report.
“We project that VN-Index is going to slightly recover and reach 450 points at the end of the year,” the HCMC-based brokerage said, adding domestic investors have tended to track international markets’ performance since last month.
“In October, we have for the first time seen the high orrelation between the Vietnamese market and Dow Jones, Nikkei, FTSE,” the brokerage said. “Many investors have watched the movements of these indices to act in the Vietnamese market.”
Analysts from Viet Dragon Securities Co., meanwhile, said the market will rise sharply if the benchmark VN-Index reaches above 380 points this week.
But investment fund DongA’s General Director Cao Thanh Dinh said the market continues to face challenging times in the mediumterm.
“Fifty percent of the assets of most investment funds, who stand on the sidelines of the market, like us, are in cash,” he says. “We hesitate to participate in the market, which isn’t positive in the medium-term.” Dinh suggested investors should opt for essential stocks, which are the safest havens at present.
STB, SSI and FPT top picks
Sacombank (STB), the HCMC stock exchange’s only listed lender, announced it had received approval from its board of directors to buy back 10 percent of its total listed shares, which is the maximum allowable rate under Vietnam’s Securities Law. The plan will see the HCMC-based bank buy back more than 51 million shares, of which 25 million shares will be purchased before December 18.
The buyback volume is equal to Sacombank’s trading volume last month, according to the Ho Chi Minh Stock Exchange. The buyback plan showed the bank is determined to boost its stock trading, analysts from the Da Nang Securities Co. said, adding they expected the stock would be the market’s key driver this week.
Sacombank closed 4.9 percent lower at VND23,300 last Friday.
Saigon Securities Inc. (SSI), the country’s largest brokerage in which ANZ holds a 18.35 percent stake, was the second-most active stock by volume after Sacombank last week, with 4.2 million shares exchanging hands. Foreign investors bought 821.890 shares of the brokerage while selling a mere 36,760.
“SSI’s third quarter earnings report shows that the firm’s assets in cash have reached more than VND1.6 billion, which encouraged investors to believe the brokerage will have opportunities to cash in on stocks that fall to an attractive level,” economist Le Dat Chi from the HCMC Economics University told Thanh Nien Daily.
SSI closed 1.04 percent lower at VND38,000 on Friday. Stock experts also expect software developer FPT Corp. will be among top picks this week as its share price was 30 percent cheaper after issuing bonus shares at a two to one ratio.
Tuong Chau
Thanh Nien
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