Shares continue rising in early August (Photo: bizlive.vn)Hanoi (VNA) - Shares continued rising in early Augustbut observers are predicting a slowdown in the short term as shares have becomeexpensive and exposed to profit-taking risk.
The benchmark VN-Index on the HCM Stock Exchange rose by 1.5 percentin the first week of August and has expanded 18.6 percent since the beginningof this year.
On the Hanoi Stock Exchange, the HNX-Index edged up 1.4 percentlast week and 27.2 percent over the end of last year.
The Vietnamese stock market has been one of the best performers inthe world.
“I think this increase has reflected investor expectation in 2017.The general market development is fairly reasonable but many stocks have grownexpensive and less attractive for investors seeking short-term profits,” said VoVan Cuong, director of analysis at Maritime Securities Co.
Price to earnings (P/E) ratio of the Vietnamese securities markethas increased to 16.6 times, the highest since 2008 and no longer cheap incomparision with other regional markets, and the risk of a correction isrising, Cuong told tinnhanhchungkhoan.vn. “Many stocks are being overvaluedwhile their growth potential is limited,” he said.
The VN-Index failed to overcome the short-term resistance of 790points in the last two weekend sessions but still maintained a nine-year peakof over 788 points that indicated investor caution and hesitation about themarket uptrend.
Selling pressure increased in large-cap stocks in the weekendtrades, especially bank stocks which were negatively affected by the arrest oftwo former Sacombank officials last week.
Sacombank shares decreased for three consecutive sessions butrecovered on August 4. Other big banks like Vietcombank, BIDV, Vietinbank,Military Bank and Eximbank experienced profit-taking selling after a longrally.
Some industry-leading stocks, such as PV Gas, Bao Viet Holdingsand Hoa Phat Group, are also weakening.
Money is being channeled into speculative and cheap stocks, suchas HAI Agrochem, property developer An Duong Thao Dien, paper manufacturerHapaco, Vietnam Ocean Shipping, An Phat Securities, Binh Thuan Mineral Industryand Fecon Mining.
Last week, liquidity increased with an average of 294.5 millionshares worth nearly 4.9 trillion VND (214.4 million USD) being traded on thetwo exchanges per session, up around 14 percent in both volume and valuecompared to the previous week.
Foreign investors maintained net buying positions in the local marketwith a total value of 730 billion VND on the two exchanges.
According to Nguyen Ngoc Lan, head of brokerage at AgribankSecurities Co (Agriseco), the market growth may slow in August with thepositive impacts of business results diminished and share prices at new highs.She added business prospects of many businesses are slower than potential oftheir share price increase.
Agriseco data shows that two-thirds of the enterprises which haveposted second-quarter financial reports reported lower profit growth comparedto the beginning of the year. “The market may need one to two weeks to absorbthe profit-taking selling and then accumulate value with a focus on stockshaving support information in the latter half of this year,” Lan said.-VNA
VNA
