Stock market expected to keep rising this year

Vietnam's stock market is forecast to keep rising in the short term but a few corrections may be necessary to re-balance the market after a long rally.

Real estate stocks will likely rise in the first months of 2018 thanks to expectations of high profits in Q4 2017. (Photo cafeland.vn)

Real estate stocks will likely rise in the first months of 2018 thanks to expectations of high profits in Q4 2017. (Photo cafeland.vn)

On the HCM Stock Exchange, the benchmark VN-Index saw the first adjustment session in the New Year on January 5 but still posted a weekly gain of 2.9 percent, ending 2018’s first trading week at 1,012.65 points, the highest level since the end of November 2007.

Meanwhile, the decline on January also cut growth of the HNX-Index on the Hanoi Stock Exchange to 1.8 percent, closing the week at 118.92 points.

The excitement of the market after conquering the 1,000 points level has temporarily subsided. However, this was reasonable as the VN-Index has rallied for nine consecutive sessions, a weekend report by Viet Dragon Securities Co said.

The benchmark VN-Index increased 7.8 percent in the past two weeks and climbed 48 percent in 2017.

“I don’t think the VN-Index is adjusting down,” said Hoang Thach Lan, head of the individual investor division at Viet Dragon Securities Co.

Lan said since December, the VN-Index has been driven up by large caps, especially the 20 companies with market values of over US$ 1 billion (accounting for over 75 percent of the HCM Stock Exchange’s total market value).

Three-forths of these companies rallied in the past one month with an average of about 13 percent, with some seeing gains of more than 20 percent such as PV Gas (GAS), Petrolimex (PLX), Masan Group (MSN) and Hoa Phat Group (HPG).

Only a few shares lost including brewers Sabeco (SAB) and Habeco (BHN), Mobile World Investment Group (MWG) and FLC Faros Construction (ROS).

The alternative growth of these heavyweight stocks will likely fuel the market in the short term, Lan said.

Liquidity was positive last week with an average of 285.5 million shares worth a combined VND 7.1 trillion (US$ 311.4 million) being traded in the two markets per session.

Foreign traders were also active on HCM City’s exchange, responsible for a total net buy value of nearly 1.2 trillion VND. However, they were net sellers in Hanoi's market for 221.5 billion VND.

Bank stocks were sold heavily in the weekend session after a long rally and analysts have reckoned some investors are channeling money into realty shares in expectations of high earnings in the last quarter of 2017.

According to Nguyen The Minh, deputy director of Saigon Securities Inc’s Retail Research, real estate companies are used to reporting high profits in the last quarter of the year. Now it is the start of the earnings reporting season and investors pay high attention to the companies with positive earnings prospects.

“I expect the real estate stocks will pick up in the first months of 2018, especially the companies with unanticipated profits recorded from transfer of projects,” Minh was quoted as saying on the tinnhanhchungkhoan.vn.

In addition, the valuation of realty stocks are now lower than the general market’s value, he said.

However, Nguyen Hong Khanh, head of analysis at Sacombank Securities Co, has warned investors of the right selection as there may be a number of companies reporting losses in the last quarter.

“Seeking low-priced stocks is necessary but the most important thing is to choose the right growing stocks,” Khanh said.

VNS

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