Stock market comment

VNStockNews.com - Market looking for more than good earning reports

We seem to have entered the summer doldrums with trading volumes falling below VND1 trillion (US$56.18 million) and not much happening in the markets. First-half earnings results have started to trickle in and so far, boosted by higher levels of financial income, they look fairly good. However, the market seems a little concerned about the prospects for the VietinBank listing given the gap between the current OTC price and the listing price; and overall sentiment is fairly subdued.

But while overall the markets are quiet, there are pockets of interest in sectors such as real estate and other select stocks such as SBT, VNE and VIS. Market breadth was narrower in HCMC and wider in Hanoi while foreigners were still net buyers in both markets.

As we mentioned Wednesday, the ongoing stalemate can continue for a little while but the risk is gradually more on the downside again especially with Thursday’s attempted rally breaking down and the weekend approaching. Good earnings reports might normally offer some support but frankly, good earnings have been priced in already and the market is looking for more than that.

Ho Chi Minh City Securities Corporation (HSC)

More declines than gains

The news for the market recently has been mainly about company earnings, but investors have already taken into account these earnings. After companies released their May figures, the index went up last month.

Without any supporting news and with increased supply of shares after the recent listings of Joint-Stock Commercial Bank for Foreign Trade of Vietnam, Bao Viet Securities Co., and some more in the coming time like the Vietnam Bank for Industry & Trade, the index has been dropping. I expect the market to fluctuate in the next two weeks with more declines than gains.

The market will reach between 450 and 500 by the end of the year because money inflows will be limited after the central bank asked commercial banks to monitor their credit growth. Companies will have to invest in their core business in the second half to meet their targets.

Trinh Vinh Quyen,
Ho Chi Minh City-based analyst at DongA Securities Co. (TN)