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Investors cut losses ahead of holiday
Shares continued to lose value last week as investors remained cautious and moved to cut losses prior to the National Day holiday.
On the HCM City Stock Exchange, the VN-Index declined by 0.93 per cent from the previous Friday to close at 396.02 points. The average daily value of trades plunged 42 per cent from the prior week to VND561 billion (US$26.7 million).
Last Monday and Tuesday, the VN-Index lost heavily, a surprise after shares had begun to rebound the previous week from the recent shock to the market caused by the arrest on fraud charges of two prominent banking tycoons, commented FPT Securities Co analyst Nguyen Van Quy.
Petrol prices also rose again during the week to VND23,650 per litre, a development that the Ministry of Finance admitted would add about 0.2 per cent to the consumer price index.
"Contrary to the preceding week, there was a shortage of positive economic information while the market had just gotten over a shock and liquidity remained low," said Quy.
As last week progressed, considerable investor caution remained, and profit-taking behaviour appeared prior to the national holiday, making further declines inevitable, he said.
"However, based on the level of liquidity, the downtrend eased and demand for shares at floor prices also increased," he added.
On the Ha Noi Stock Exchange, the HNX-Index concluded the week at 61.43 points, down 2.7 per cent from the previous Friday. The value of trades averaged just VND281 billion ($13.3 million) per day, a decline of 37 per cent.
Quy noted that the T+3 settlement period begins to be applied today, allowing investors to turnover shares one day earlier than before. In the context of current low liquidity, however, the change was not expected to be as effective as had been hoped.
"If a rally is formed this week, it won't last long," he predicted.
Selecting stocks that retained good fundamentals despite recent sharp price declines would be good buys for long-term investors, he said, pointing to shares of softwared developer FPT. The temporary absence of the company's CEO, Truong Dinh Anh, has negatively affected its share price, and FPT has adjusted its earnings target downward by 17 per cent to VND26 trillion ($1.2 billion) and its profit target for the year by 15 per cent to VND2.5 trillion ($119 million).
"This change is inevitable as FPT's first-half operations were bleak, with profits rising by only 6 per cent compared to a target of 22 per cent," commented VietCapital Securities Co analysts.
Anh appeared at a recent meeting and announced that he would return to work after two weeks of rest.
Taking advantage of Viet Nam's declining stock market, foreign investors during the past month bought shares on both bourses worth a net of nearly VND600 billion ($28.5 million). Buys were concentrated mostly in Phu My Fertilisers (DPM) and PetroVietnam Gas Corp (GAS). The market remains dark today due to the holiday
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