VINACHEM

Vietnamese shares may fall this week as investors look for profits in stocks that showed sharp increases last week, brokerage companies warned.

Vietnamese shares ended last week higher after five sessions, beating previous forecasts that said local markets might decline on investor uncertainty over effects on the global economy, after British people voted to leave the European Union.

The benchmark VN Index on the HCM Stock Exchange ended up 1.3 per cent at 640.30 points on Friday, near the two-year high of 640.75 points reached in September 2014. The southern market index jumped a total of 3.1 per cent in all five trading days.

The HNX Index on the Hà Nội Stock Exchange edged up 0.5 per cent to finish Friday at 85.15 points. The northern market index climbed a total of 1.8 per cent over the week.

“Local market indices may pull back this week as stocks picked up by investors on June 24 - which then rose sharply last week - may run into profit-taking,” Sài Gòn-Hà Nội Securities Corp (SHS) wrote in its weekly report.

"Technically, three or four declining sessions this week are necessary for local markets, especially after they rose strongly in the last five trading days," Dương Văn Chung, head of investment division at Military Bank Securities Corp (MBS) said.

The main reason for sharp gains in local markets last week was higher investor confidence on expectations that Britain’s leaving the European Union will takes years to impose any impact on the domestic economy.

Positive outlook on the global economy after Britain decided to terminate its membership in the EU - which eased investor fears over a US interest rate hike this year - also helped ease the exchange rate between the Vietnamese đồng and the US dollar.

Việt Nam’s central bank cut its daily reference mid-point rate last week by VNĐ23 to VNĐ21,865, from VNĐ21,888 for a dollar, the highest mid-point rate since the Brexit vote.

The lower exchange rate between the đồng and the dollar encouraged foreign investors to record a net buy value of VNĐ293.7 billion (US$13 million) during the week, five times the value reached in the previous week.

Better investor sentiment lifted blue-chip stocks, such as Vicostone (VCS), Việt Nam Construction and Import-Export Corp (VCG), insurer Bảo Việt Holdings (BVH), and Bình Minh Plastic JSC (BMP).

BVH jumped 4 per cent during the week, VCG surged 13 per cent, VCS rose 5.5 per cent, and BMP advanced 3.5 per cent.

Two of the largest listed firms, dairy producer Vinamilk (VNM) and property and retail firm Vingroup JSC (VIC), added 4.4 per cent and 9 per cent, respectively.

Vinamilk, which announced last week that it would lift the bar on foreign ownership, and Vingroup were among property developers that expected higher earnings in the second quarter of 2016.

Other shares that made good gains during the week and could face profit-taking this week included BIDV Insurance Corp (BIC), Bảo Minh Insurance Corp (BMI), and PVI Holdings (PVI).

Q2 earnings to be unveiled

Investors may also count on second-quarter earnings that will be revealed in the near future, securities analysts said.

“Industries may have performed better in the second quarter, included steel producers, construction companies and real-estate developers,” said Nguyễn Hồng Khanh, head of the market analysis division at Sài Gòn Thương Tín Securities Corp (SBS).

Those companies’ performances will depend on how the real-estate market recovered in the past three months.

Last week, property services provider CBRE Việt Nam released reviews on the Hà Nội and HCM City markets, saying that sales in these two cities saw gains between April and June, bringing higher investor confidence in property developers, construction companies and building material producers.

Oil prices also increased since the beginning of the year, which will result in higher profits for energy firms such as PetroVietnam Gas Corp (GAS) and PetroVietnam Drilling and Well Service Corp (PVD).

London-traded Brent crude closed up 1.3 per cent at $50.35 a barrel on Friday. Brent crude jumped more than a quarter in the past three months and jumped about 80 per cent since late January.