Passengers check-in for a Vietnam Airlines flight in Da Nang on August 12. The firm shares (HoSE: HVN) gained a total of 6.3 per cent last week.

The benchmark VN-Index on the Ho Chi Minh Stock Exchange last week gained a total of 2.57 per cent to 901.54 points.

On the Ha Noi Stock Exchange, the minor HNX-Index inched up 0.25 per cent to 126.15 points by the end of the week.

The VN-Index has increased by 14.8 per cent over the last six weeks since July 27. During the same time, the HNX-Index rose 22.6 per cent.

Consumer-related stocks had the best gains last week. Large-cap firms in the sector such as retailer Mobile World Investment (MWG) and airlines Vietjet (VJC) and Vietnam Airlines (HVN) advanced 1.4 per cent, 7 per cent and 6.3 per cent, respectively.

Financial-banking stocks also made strong gains such as SSI Securities (SSI), HCM City Securities (HCM), insurer Bao Viet Holdings (BVH), Vietinbank (CTG), Bank for Investment and Development of Vietnam (BID), and HDBank (HDB).

“The VN-Index has technically defeated the resistance of 870 points – which should pave the way for the index to hit its previous peak of 905.65 points in June,” Sai Gon-Ha Noi Securities (SHS) said in its weekly report.

“In the short run, the benchmark – led by the large-cap sector VN30 – has become overbought” and “local stocks will be weighed down by profit-taking after a six-week growing streak,” the company said.

“The market may experience considerable corrections and volatility during its uptrend,” Bao Viet Securities (BVSC) said in its report. “The market will continue to see a wide divergence among stock sectors” as “large-cap stocks may rotate their increase to support the market’s upward momentum.”

The VN-Index may struggle between 900 points and 905 points, according to SHS, while BVSC expected the market to rise to 920 points, then settle down.

Among the factors that may affect domestic market sentiment this week are the movement of US stocks, the change of Viet Nam-focused exchange-traded funds (ETFs), and the development of the coronavirus situation in the country.

US stocks fell on Friday as investors took profits from heavyweight tech stocks. The world’s largest economy is also entering a volatile two-month period prior to the presidential election.

The latest US employment report on Friday showed job growth slowed in August as government-funded financial aid was running out while the Democrats and Republicans reportedly lack consensus on a new stimulus package.

Following the events, the Federal Reserve chairman Jerome Powell said the US central bank will keep interest rates low as long as possible.

Shining September

Despite the potential challenges, the Vietnamese stock market may fly high in September with the VN-Index expected to touch 920 or 940 points, securities firms forecast.

In August, the VN-Index gained 10.4 per cent – the highest growth in the world – and “the growth was based on the efforts of the Government, local authorities and people to restrain the spread of coronavirus,” Dinh Quang Hinh, VNDirect Securities’ head of macroeconomics and market strategy told Viet Nam News.

“Another reason is the positive performance of global stocks, especially the US market, and the introduction of the Taiwanese Viet Nam-focused investment fund with total committed capital of US$160 million,” he said.

The Taiwanese fund managers plan to buy fund certificates of the domestic exchange-traded fund VFMVN Diamond.

The ETF debuted on the Ho Chi Minh Stock Exchange on May 12 and tracks stocks in the southern bourse’s VN Diamond Index, which represent companies that have reached their foreign ownership limit.

The appearance of the new fund on the Vietnamese equity market helped boost large-cap stocks such as Mobile World Investment (MWG), tech group FPT Corp (FPT) and Refrigeration Electrical Engineering Corp (REE) as well as other blue chips, in which there is limited room for foreign investors to buy shares, such as realty firms Vinhomes (VHM) and Vingroup (VIC) and dairy producer Vinamilk (VNM).

According to Hinh, net domestic purchasing, especially from institutional investors, reached a 15-month high of VND2.1 trillion ($90.5 million) since May 2019. More than 56 per cent of the figure, worth VND1.18 trillion, came from securities firms.

“Brokerage houses may be preparing for the official penetration of the Taiwanese fund,” he said, adding domestic purchasing power has helped the market cope with the outflow of foreign capital.

Foreign investors net-sold VND3.43 trillion worth of local shares in August, raising total net selling value to nearly VND7.8 trillion.

The market uptrend may continue in September once the Taiwanese fund starts investing in local assets, he forecast.

According to securities companies, other factors that will lift the market in September include the cheap valuation of Vietnamese stocks compared to other regional markets, declining interest rates, better control of the disease, the recovery of trade activities, and improved disbursement of the State budget for State-funded projects.

Several sectors have performed quite well despite the COVID-19 pandemic having hit the global and Vietnamese economies hard in the past nine months, Hinh at VNDirect Securities Corporation said.

Businesses in fertiliser and petrochemical production, pharmaceuticals and medical equipment, and materials may report better-than-expected earnings in the last two quarters of the year, Hinh said.

“Listed companies will report better earnings in the third quarter from the past two quarters” as “their businesses were tackled quite hard in the first half of the year by the disease and social distancing measures,” he added.

“But the third quarter of this year will still be a big disappointment compared to 2019,” he said.

“What we are expecting is investors have braced for earnings contraction,” Hinh said. “The overall morale will not be ravaged by such expectations.” — VNS

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