Investors advised caution on large caps

Investors should be cautious about large caps this week, given the heavy selling of such stocks last week, an investment fund manager has urged.

The VN-Index, the gauge of 156 leading firms and four closed-end funds listed on the Ho Chi Minh Stock Exchange, last week rose slightly 1.4% to 546.66 points after a four-day break for the National Day.

Stocks with large market capitalization were sold heavily as investors rebuilt their investment portfolio, says Le Van Thanh Long, director of Ho Chi Minh City-based investment fund An Phuc.

Foreign investors sold 11.2 million shares while buying only 5.8 million last week.

PetroVietnam Fertilizer and Chemical Joint Stock Co., Pha Lai Thermal Power, steel maker Hoa Phat Group, oil drilling firm PV Drilling, telecommunication material supplier Sacom, bakery Kinh Do, industrial zone operator Tan Tao were among the stocks they sold the most.

The move shows they have profited from the market’s recent strong rallies.

“We suggest investors are cautious with Sacombank and FPT Corp next week,” Long says.

After a four-day break, Sacombank, or Saigon Thuong Tin Commercial Bank, went up strongly for two days in a row, following the State Bank of Vietnam’s move to increase the interest rate it pays on mandatory reserves to 3.6% from 1.2%.

However, the lender, which is the exchange’s only listed bank, ended on a note of gloom last Friday, slipping 4.9% to close at VND31,000, after it announced an issuance of more than 66 million bonus shares on the HCMC exchange next Wednesday.

“Sacombank will continue to fall sharply early next week as investors sell off to make profits,” Long said.

“It is likely to rebound after it drops below VND30,000.”

After tumbling in the second quarter, technology giant FPT Corp roared back over the market’s recovery in the third quarter.

The firm, which is among the market’s largest caps, has made an impressive rally of 154 percent since July 1.

However, the winning streak showed signs of running out of steam as investors cashed in their stocks for profit.

FPT slid 4.5% to close at VND127,000 last Friday.

Despite foreigners’ heavy buying of the company’s shares last week, Long expects “FPT will continue to retreat next week as investors keep selling off to take profit.”

“The firm will rally after diving to VND100,000,” he predicts.

Small caps top picks

While large caps were sold off last week, shares of listed companies with small market capitalization were investors’ favorites.

Figures from brokerages showed small caps - such as Dong Nai Roof-sheet and Construction Material Joint Stock Co., construction material maker DIC, cement manufacturer Da Nang, agricultural and aquaculture product maker Khanh Hoi and sugar maker Bourbon Tay Ninh - had more than unmatched buying orders last Friday.

The research department at An Phuc Securities Investment Fund Management Corporation predicts that without any breakthrough news on the market, the VN-Index will lose ground this week, with trading volume decreasing slightly over last week, as money pumped in large caps will move to small ones. (TN)