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Stocks may fall further as crude plunges
Stocks may extend losses this week, as investors remain cautious and lack confidence amid fears of a slowdown in China's economy and banking sector.
This prediction was stated by Sai Gon-Ha Noi Securities Corporation (SHS) in their weekly report.
SHS said local markets faced risks, as both local and foreign investors in Viet Nam tried to sell stocks in order to cut losses, amid fears that the central bank could weaken the dong, as it copes with pressure from China's declining economy.
Meanwhile, Vietnamese shares declined on both local markets last Friday. The benchmark VN Index on the HCM Stock Exchange dropped 1.8 per cent to end at 543.04 points. The southern index fell 3 per cent from the previous week, losing 6.2 per cent since the end of last year.
Also, the HNX Index on the Ha Noi Stock Exchange was down 0.4 per cent to finish Friday at 75.39 points. The northern index fell by 1.3 per cent over the week and has decreased 5.7 per cent since the end of last year.
Investor confidence remained low after Asian stocks and US stocks extended losses due to the slowdown of China's economy and declining bank loan data in December, which pushed investors to sell stocks in order to reduce losses in the stock markets.
Additionally, large-cap stocks continued to suffer from low investor confidence. The largest stocks on the market closed at lower prices over the course of a week, such as dairy firm Vinamilk (VNM), falling 1.6 per cent, and food and beverage producer Masan Group (MSN), which slumped 8.5 per cent.
Financial firms, including insurers and banks, also helped pull the markets down. The largest ones declined, such as Vietcombank (VCB), which fell 3.8 per cent last week, the Bank for Investment and Development of Viet Nam (BID), which lost 5.3 per cent, and insurer Bao Viet Holdings (BVH), which fell 9 per cent.
Last week, Viet Nam's central bank raised its reference mid-point rate for its exchange trading band by VND8 to VND21,917 per dollar. Of note, the reference mid-point rate has gained 27 dong since the end of last year.
Global oil prices will also be another factor that puts heavy pressure on local energy stocks, as the two benchmark crudes have created fresh twelve-year lows. Crude prices are expected to fall deeper, as Iran, one of the largest crude exporters, floods the global crude markets with more products after long-standing nuclear sanctions are removed.
US benchmark crude West Texas Intermediate (WTI) lost 11.3 per cent to close at US$29.42 per barrel and has fallen more than 20 per cent since the end of last year. The London-traded Brent crude dropped 13.7 per cent last week, to close at $28.94 per barrel, and has declined more than 22 per cent since the end of last year.
Among energy stocks, PetroVietnam Gas Corporation (GAS) and PetroVietnam Technical Services Corporation lost 2 per cent each last week, and PetroVietnam Drilling and Well Services Corporation (PVD) fell 3.1 per cent.
Both local markets last week traded a daily average of 168 million shares, worth nearly VND2.2 trillion ($97.5 million), a slight decrease compared to the previous week's trading value and below last year's daily average trading value.
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