Market to stay flat again this week, brokers

By Phuong Thao - The Saigon Times Daily Local stock investors follow prices on the electronic quotation board of a securities firm in HCMC. Securities companies have forecast the market will remain flat with the key index moving between 443 and 460 points this week - Photo: Le Toan HCMC – Since investors are still worried about huge share supplies in the future while cash flow remains weak, many securities enterprises forecast the market to remain flat with the VN-Index oscillating within 443 and 460 points this week. The market closed the first week of October with a modest change of the stock index but a strong decline in trading volume. On the southern bourse, the VN-Index gained a slight two points, or 0.44%, against the previous week to close at 451.71. Liquidity, meanwhile, tumbled as there was an average 37.1 million shares worth VND1 trillion traded daily, dropping by 20.4% and 21.3% against the previous week respectively. With three rising and two falling sessions, the market saw 64 stocks advancing, 174 stocks closing down while 25 others moved sideways at the end of the week. Last week brought positive information of the macro economy, including strong growth rates of total retail and service revenue and gross domestic product (GDP) in the third quarter and the first nine months of this year. However, local investors were very cautious and decided to stand back to gauge the huge supplies in the last quarter of 2010, according to Vietnam International Securities Co. (VIS). Foreigners, after a strong purchase on Thursday to beautify the third quarter financial reports, suddenly decreased trading the next day. The investors were still net buyers for around 7.1 million shares worth VND314 billion during the week. “Foreigners are net buyers for a tune of over VND9.5 trillion this year, suggesting that they have bought a large number of stocks given narrow trading on the local market. They are expecting at a long-term index rally when both domestic and international economies actually recover,” VIS said. Fiachra Mac Cana, managing director of HCMC Securities Corp., said the third quarter earnings season is of course about to begin and with strong credit growth seen this quarter, investors expect on the whole results will be positive. “We note that credit growth is a good leading indicator of corporate activity and even profitability and we suspect most earnings surprises will be positive,” he said. “However, it must be said that equity markets are slipping into inactivity once again characterized by tight trading ranges and low volumes. It was not surprising really with gold markets popping and attracting retail interest while the bond market sprang into life last week and drew attention from banks. We had thought we might see a short term bounce this week but clearly it has not happened. The short-term risk is slightly to the downside. We keep our view that medium to long term investors can continue to pick up stock at these levels,” Mac Cana added. The Hanoi market also witnessed three rising and two falling sessions last week, with the HNX-Index losing 3.82 points, or 2.95%, against the previous week to close at 125.81. The market’s liquidity was sharply low with the average daily volume of 28.4 million shares worth VND660 billion, falling by 22% and 26% from the week earlier respectively. VIS said the market would see seesaw trading this week.