Oct 23, 2012

Vietnam - Losses seen extending this week – brokers

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HCMC – Securities firms have forecast stock trading could remain flat early this week as worries about a possible rise in the October consumer price index will keep investors on the sidelines.

Last Friday, both indices gained in early trade but fell into negative territory in the middle of the morning session after the announcement of Long An Province’s month-on-month CPI rise at 1.4%. Meanwhile, the October CPI of Hanoi increased 0.37% month-on-month and 6.75% year-on-year. These figures stoked fears that the Government will take actions to ensure the inflation target of 8-9% could be achieved.

The banking sector also experienced a losing session given pending third quarter results and investors’ concern that earnings of large banks could be affected by lower net interest margin and the central bank’s Circular 12 that requires banks to cover their short gold position by November 25. Only EIB moved in the opposite direction upon some quite astonishing last minute transactions.

Meanwhile, foreigners net bought a total of VND32 billion worth of shares compared to VND10 billion in the previous session as they turned more active, speculating on price reversals.

Viet Capital Securities Co. (VCSC) thought that Friday was a “shake-out” session, when the market suffered from forced selling pressure, causing individual investors to panic. But afterwards demand quickly rose when prices dropped to a new low.

However, the week closed with the VN-Index gaining 1.4% thanks to healthy gains on Tuesday while the HNX-Index lost 1.3% against a week earlier. Liquidity was flat with just a 3% increase in daily average volume and 2% increase in value compared to that of the previous week.

“In the coming sessions, the CPI news may continue dampening investor sentiment, especially when the VN-Index is trading at the psychological resistance level of 400 points. As such, we recommend investors remain on the sidelines and wait for clearer signs of the market,” VCSC said.

“We still believe that the short-term uptrend will stay and the market will probably move sideways in the first session of the next week, so investors should not rush to sell but wait for the next sessions. If demand remains in low price territory, the market is likely to move sideways in consolidation for the next sessions. If the market breaks above the short-term resistances, the uptrend will be strong.”

Phuong Thao

The Saigon Times Daily

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