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Q3 results seen no buoy for stock market
Portfolio investors and experts differ in their expectations of results of listed firms for the third quarter, but whether good or bad, experts say the results won’t make an impact on the market, which has undergone dreary trade for long.
Sobering report
Investors expect to see positive changes in the quarter business results, but according to an investment strategy report of SME Securities Company, investors have set their hopes too high as listed enterprises in the third quarter were assailed with power shortages, high lending rates and inflation. Some sectors also faced input material price hikes that hampered production and business activities, says the stock broker in it report, adding it was hard to achieve high profits in the third quarter.
Le Anh Thi, Deputy Director of Au Viet Securities Company, remarks that the credit growth is not as high as projected showing that enterprises could not access bank loans to expand their business, making strong profit increases impossible.
In addition, the stock market despite no sharp decline has made little improvement and low liquidity has persisted. The situation will adversely impact enterprises with large financial investment such as securities companies, banks, insurance and financial services providers. Enterprises with financial investments will also have to deduct profits as provisions for losses caused by falling stock prices.
The SME Securities report says unlike previous months, few enterprises have announced estimated business results for the third quarter, which implies that the third-quarter business results were not as high as expected.
Thi predicts that enterprises will not report full financial gains in the third quarter and would particially account the earnings into their fourth quarter’s reports when such reports are audited. Investors also pay more attention to the fourth quarter since the reports in the third are not checked.
Shipping, seafood and real estate sectors are predicted with slight profit growth in the third quarter. Marine transport still has not recovered as the world economy is recuperating from recession and gasoline prices keep soaring. Seafood enterprises are faced with anti-dumping duties while the property market has been hibernating with supply exceeding demand.
SME Securities, meanwhile, pins high hopes on consumer goods and services, book publishing, rubber and pharmaceutical sectors.
A head analyst of another securities enterprise says the steel sector will report high profits for the third quarter. The cheap steel ingot inventory stocked during May and July provided enterprises with low-cost input materials in the last two months of the quarter while finished product prices stayed high. Large steel firms such as Dai Thien Loc, Hoa Phat and Huu Lien will announce high profits, the expert explains.
Impacts on stock market
Thi of SME Securities says the local market will not be affected by financial reports in the third quarter as the results might not be accurate. It will be macro economic factors such as inflation and bank lending rates that count.
The stock broker, instead, suggests that the market will be under the cash flow pressure as Circular 19, which took effect October 1, retains the risk coefficient ratio for securities at 250%, a level unlikely to encourage banks to loan further funds for securities investment. Its report also shows concern that the ebullient gold market will draw away a huge cash flow from the stock market.
Viet Dragon Securities Company in its strategic report says the market has seen strongly increasing share supply from early this year, up to 3.1 billion shares worth VND90.8 trillion.
According to the State Securities Commission (SSC), as of the end of September around VND34.6 trillion had been mobilized via public offerings with half of that raised in the third quarter. The number will increase as SSC approved issue of 2.69 billion shares in August and September.
Meanwhile, nearly 1.3 billion shares will be traded on the Hochiminh Stock Exchange while PetroVietnam Gas Corporation will launch an IPO (Initial public offering) in the middle of this month. The huge supply is still an obstacle to the market in the last quarter of this year.
VietNamNet, SGT
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