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|Stocks bounce back as concerns ease, illustration photo|
Worries about global growth preoccupied investors just days ago appear to have eased as corporate earnings have beaten expectations. Meanwhile, China outlined plans to slash tariffs, helping boost sentiment among traders and investors.
With a slowdown in upward momentum and alternative ups and downs during the trading session, the VN-Index gained 0.24 per cent to 940.75 points as of February 7, its second straight gaining session after plunging over 6 per cent in the previous five.
This partly reflected investors’ cautiousness – however, in general on the weekly chart, the index has improved considerably from support zone 891-898 points.
Though volatility in markets is going to be here for the foreseeable future, recent actions by the Vietnamese government in line with international peers to boost growth and limit the contagion are driving a steady advance that has been hard to bet against.
“There are some green shoots of optimism, but admittedly you have to look harder for them than usual,” Phan Dung Khanh, investment director at Maybank Kim Eng Securities told VIR.
Besides that, the Ministry of Planning and Investment released a new forecast, with a cut in full-year 2020 GDP forecast to 6.1-6.3 per cent due to the coronavirus outbreak, which is around 0.7-0.5 per cent lower compared to the previous target of 6.8 per cent.
Banks gave back recent gains after the State Bank of Vietnam asked them to assist companies hit by the outbreak. However, some lost, such as VietinBank sliding 3.1 per cent, BIDV dropping 2.8 per cent, and Military Bank decreasing 1.8 per cent.
The VnIndex is forecast to drop to support zone 930-936 points early this week and rebound toward the weekend. However, the market’s recovery will face various challenges from resistance zone 945-950 points.
“We leave open the possibility that the market would reserve down at the aforementioned resistance zone as the epidemic remains complicated, while foreign investors continued their net selling activities for the fourth consecutive session,” noted Tran Xuan Bach, senior analyst at Bao Viet Securities. Bach also pointed out if the market successfully retests support zone 930-936 points, investors with high cash proportion may consider buying at stocks at low proportion, prioritising portfolio’s existing positions.
A breakout at either limit will bring about a fluctuation at that point. In a positive scenario, the market is forecast to drop to support zone 935-936 points but then regain a recovering trend in the short term.
Some market movers to watch
Novaland (NVL) – Ho Chi Minh City Stock Exchange (HSX):
NVL shares closed up 2.1 per cent to VND54,100 ($2.35) as of last week despite the Ministry of Construction halting NVL’s projects in District 2.
Chairman Bui Thanh Nhon registered to buy 10 million NVL shares, raising ownership to 201.7 million shares or 21.1 per cent of NVL capital. The group finalised the list of shareholders to consult them on share issuance to increase charter capital using owners’ equity.
Earlier, NVL submitted a request to the Ministry of Construction to resume its 30.2-hectare Water Bay residential project in Binh Khanh ward of District 2 to reclaim the VND6 trillion ($26.1 million) investment.
Sabeco (SAB) – HSX:
SAB shares edged up 4 per cent as of last week after falling 17 per cent in the year-to-date after the new, heavier-handed sanctions for drink-driving, as per Decree No.100/2019/ND-CP. However, consensus expectations for 8 per cent revenue growth and 19 per cent earnings per share growth in 2020 may be overly optimistic in light of the weak operating environment in the first quarter of 2020, which raises the possibility of negative forecast revisions.
“Management expects raw material input prices to decline this year, and they plan to continue to drive production efficiencies at existing breweries despite the demand headwinds. SAB also discussed plans for three new 100-per-cent-owned breweries which should be completed in one or two years,” noted Matthew Smith, head of Institutional Research at Yuanta Securities, after SAB’s analyst meeting on February 6.
Smith stated that urban centres are not SAB’s core market, but the group acknowledges that operating conditions are tough nationwide. Thus, the management’s focus on improving cost efficiencies is prudent.
Vinhomes (VHM) – HSX:
VHM slightly rose 0.2 per cent to VND87,000 ($3.80) per share, but analysts recommend it would need strong momentum to carry over this year thanks to its 132-per-cent increase of earnings in the fourth quarter of 2019.
Researchers view VHM as an outperformer since three megacities remain the bulk of launches planned in 2020. Furthermore, VHM is considering industrial real estate as another potential source of profit and cash-flow diversification, and to bolster its recurring income portfolio.
“VHM may expand into the industrial segment to broaden its business scope after studying the profitability and growth potential of six projects in the northern city of Haiphong before finalising any decision,” noted Pham Hoang Bao Nga, analyst at KB Securities.