The Ho Chi Minh Stock Exchange in HCM City. (Photo: cafef.vn)Hanoi (VNS/VNA) - The Vietnamese stock market suffered duringthe week from July 29 to August 2 after having rallied for four consecutiveweeks amid negative news from the international markets.
The downtrend is expected to continue in August while investorsare finding it harder to earn profits in the short term.
Vietnam’s benchmark VN-Index on the Ho Chi Minh Stock Exchangefinished the week from July 29 to August 2 at 991.10 points, down total 0.22percent on a weekly basis.
That was the first losing week for the VN-Index after it hadgained total 5.32 percent in four straight weeks between June 27 and July 26.
Foreign investors net sold total 461 billion VND worth of shareson the southern market. An average of nearly 177 million shares was traded ineach session, worth 4.43 trillion VND.
The market rally stopped because investors were stunned by negativedevelopments in the US-China trade relations.
After the talks between the two sides’ top officials ended withoutany consensus, the market was hit by the idea of US President Donald Trumpabout a 10 percent tax bill on 300 billion USD worth of Chinese productsimported to the US.
The idea, scheduled to take effect on September 1, will clearlyworsen the bad trade relations between the US and China amid worries about theslowdown of the global economy.
Meanwhile, the US Federal Reserve’s July meeting concluded withlending rates being cut by 25 basis points instead of 50 basis points.
The rate cut had been widely expected. However, what worriesglobal investors is that the Fed’s statement on future rate cuts seems too softand depends on the strength of the US economy.
According to Le Duc Khanh, director of market strategy atPetroVietnam Securities JSC, the unpredictability of US policies has causedglobal economies and equities markets to become more volatile.
Those developments will have a deep impact on other central banks’monetary policies and on commodities like oil and gold, thus global stockmarkets may fall in the coming week.
Since March, the Vietnamese stock market has reacted little tointernational news and the impact of internal factors, Hoang Thach Lan,director of individual investors department at Viet Dragon Securities Co, toldtinnhanhchungkhoan.vn.
In August, the US and China will return to the ring amid theescalation of their trade war. A lot more tough decisions and negative news areexpected and the market sentiment will be dampened, he said.
Besides international news, the internal power of the Vietnamesestock market is not as good as expected because corporate earnings are belowexpectations.
According to BIDV Securities Corp, 693 listed firms or 93 percentof all listed companies have announced their Q2 results by the end of the week.
After the second quarter, those companies earned total 108trillion VND (4.64 billion USD) in six-month post-tax profit. The figure was uponly 3.4 percent year on year.
Fifty-one percent of those firms recorded positive earnings growthrates while 12 percent of them suffered losses in the first half of the year.
However, major earnings still came from large-cap stocks as two-thirdsof the earnings were contributed by large-cap firms.
Banks also had the highest portion of the market’s total,accounting for 15.6 percent of the market’s so-far total earnings.
That means small- and medium-sized companies were still leftbehind amid the difficulties of the economy.
According to Bao Viet Securities Co (BVSC), business results arestill the support of the market but they are not the most important factor asin previous years.
As of July 3, Vietnam’s price-to-earnings per share ratio (P/E)and price-to-booking per share ratio (P/B) were 16.6 and 2.4, respectively,which is comparable to other regional markets.
Corporate earnings indicated “a slowdown in revenue and profits ofbusinesses listed on the Ho Chi Minh Stock Exchange (HoSE) and Hanoi StockExchange (HNX),” BVSC said in its six-month macro-economy report.
“Earnings per share growth may not be maintained at a high levelas in previous years. In the second half of 2019, business performance will nolonger lead the market up as in 2017 and 2018 though it is still supporting themarket.” –VNS/VNA
