A female investor watches stock prices on a desktop. Vietnamese shares are predicted to remain quiet in September under pressure of the trade wars (Photo: tinnhanhchungkhoan.vn)Hanoi (VNA/VNA) - The market sentiment will remain lateral inSeptember weighed down by global economic and political tensions while tradingquiet amid speculations of Q3 corporate earnings.
The US-China trade war was taken to the new level on September 1 after Chinaand the US announced tariffs imposed on each other’s products.
Even comments from US President Donald Trump about the continuance of new tradetalks cannot clear the cloud that has overshadowed the global markets in recentmonths.
Political and economic tensions in other areas of the world such as the EastAsia (between Japan and the Republic of Korea) have also cautioned investors inVietnam about the global economic recession.
The benchmark VN-Index on the Ho Chi Minh Stock Exchange gained 0.56 percent toclose last week at 984.06 points but it dropped total 0.84 percent last week.
The VN-Index has struggled to rise in total as much as 5.82 percent since June27. It has failed to conquer the 1,000-point level three times.
On the Hanoi Stock Exchange, the HNX-Index increased 0.37 percent to end at102.32 points, totalling a weekly loss of 0.90 percent.
The market is in negative shape and is too dependent and driven on theinternational developments, according to Phan Dung Khanh, director ofinvestment consultancy at Maybank Kim Eng Securities.
Worries about the global economy and stocks have triggered stronger foreignselling in recent weeks, putting more pressure on the Vietnamese market, Khanh toldtinnhanhchungkhoan.vn.
Last week, foreign investors net-sold total 130 billion VND (5.6 million USD)worth of Vietnamese shares. Net foreign selling in August touched 1.73 trillionVND, which was a back step compared to July’s net foreign purchase of 2.24trillion VND.
The US-China trade war clearly has impeded the foreign capital flowing into Vietnam’smarket in recent weeks. Plus the decline of trading liquidity, “Vietnameseshares will remain quiet in the coming weeks if there are no improvements inthose factors,” he said.
An average of more than 187.6 million shares was traded in each session of lastweek, down 4.5 percent from the previous week.
According to Viet Dragon Securities Co (VDSC), core inflation has caught up onthe Government’s target of 2 percent for 2019, therefore, it is unlikelyinvestors will be able to seek financing for their purchases in the remainingmonths.
In addition, the central bank’s monetary tightening policy towards the sectorswith high demand of long-term capital such as realty has made corporate bondmarket, which has average per annum yield rate of 11-14.5 percent, become moreattractive to investors than stocks.
The US-China trade war and its potential risks on the global economy also pressinvestors to escape from stocks and find shelter in safer ones (gold,government bond and US dollar), so the market trading liquidity will unlikelyincrease in the future. So the VN-Index may be unable to post sharp gain.
Investors are becoming less dynamic and excited, so the market is gettingquieter with stocks being hit by selling pressure, Nguyen Trung Du, director ofmarket analysis at VNDirect Securities Corp, said.
“There is now no information that is strong enough to cushion the marketsentiment and overwhelm worries about the economic recession,” he said.
“There is no clue for a positive rebound of the stock market in September andthe best forecast now is the market will move sideways amid speculations aboutQ3 corporate earnings season,” Du said.
But it is too risky to begin hunting for companies’ stocks with expectationsfor good Q3 performances, Khanh at Maybank Kim Eng Securities Co said.
“The global economy is going down, Vietnam’s economic growth is slowing, anddomestic firms are being heavily weighed down by the trade war,” he said.
In the second quarter, total profit of listed firms rose only 5 percent year onyear – the lowest in five years. The number of loss-making firms accounted for15 percent of total listed firms and a third of total firms posted lowerprofits. – VNS/VNA
VNA
