Stocks to struggle on mixed Q2 earnings report releases
As companies are about to release their second-quarter earnings reports, mixed performances will continue across sectors and keep the market struggling in the coming week.
A facility of the PetroVietnam Fertiliser and Chemical Corporation in Ba Ria-Vung Tau Province's Tan Thanh District.
Vietnam’s benchmark VN-Index on the Ho Chi Minh Stock Exchange gained a total of 2.78 per cent last week to finish at 871.21 points.
But a 0.6 per cent drop on Friday put an end to the benchmark’s five-day rally of total 4.04 per cent.
“Investors may think about holding onto their cash right now as the market has entered the last stage of its recovery since the VN-Index bottomed at a three-year low of 650-660 points in late March,” SHS said.
After touching a five-month high of 900 points on June 10, the VN-Index has lost as much as 8.33 per cent. Despite the growth, there were still some struggles with the index in the last month.
One of the main factors that have propelled the market since the end of March is the strong domestic purchasing power of unexperienced, unprofessional individual investors, known as 'F0' buyers.
However, because the VN-Index is now near its short-term peak and the upcoming days may create the last wave of the recovery phase, shareowners are advised to cash in if the VN-Index falls back to 855 points, SHS said.
Attention is now on companies’ second-quarter earnings reports, brokerage firms said.
Listed companies and unlisted public firms are expected to publicise their Q2 earnings reports within 20 days of the end of June. They may ask the market regulators for a deadline extension of a maximum 10 days.
Despite the COVID-19 pandemic and its severe damage to the global economy, some groups of companies may have found a way to thrive.
Consumer staples, utilities and banking were the main drivers of the stock market last week as the three industries grew 4.9 per cent, 4.1 per cent and 2.9 per cent, respectively, Sai Gon-Ha Noi Securities (SHS) said in its weekly report.
Other sectors that also advanced included industrials (up 3 per cent), information and technology (up 2.9 per cent), financials (up 2 per cent), materials (up 1.2 per cent), and oil and gas (up 1.1 per cent), SHS reported.
Companies in consumer staples and utilities are expected to keep performing well in the second quarter despite the one-month nationwide social distancing in April as their products are necessities.
Driving the two sectors up last week were brewers Sabeco (SAB) and Habeco (BHN), dairy producer Vinamilk (VNM), feed producer Dabaco (DBC), PetroVietnam Gas (GAS) and PetroVietnam Power Corp (POW).
Banks also had strong gains on expectations for more stimulus from the Government to boost the economy and lending activities.
Bank for Investment and Development of Vietnam (BID), Vietinbank (CTG), VPBank (VPB) and Asia Commercial Bank (ACB) were among the biggest gainers, rising between 4.3 per cent and 6.7 per cent.
Some textile companies are also forecast to cushion the impact of the COVID-19 pandemic on their business thanks to increased demand for medical protective gear from the US and European markets.
In addition, the collapse of oil prices in early April helped fertiliser and petrochemicals firms cut production costs and maximise profit margins.
PetroVietnam Fertiliser and Chemicals Corporation (DPM) has reported total production kept increasing in the second quarter on lower production costs. Total revenue in the first half was estimated to rise 14 per cent year-on-year to VND4 trillion and pre-tax profit may soar 334 per cent year-on-year to VND425 billion.
Listed brokerage firms such as SSI Securities (SSI), HCM City Securities (HCM), VNDirect Securities (VND) and VietCapital Securities (VCI) also benefited from the surge of new investors.
Divided second-quarter earnings reports will keep the market swinging around 870 points, BIDV Securities Corp (BSC) said in a report.
The local market will also be supported by the growth of international stocks, which benefited from individual purchasing despite the surge of new coronavirus cases, BSC said, adding the trend shows no signs of ending.
However, the strong gains of large-cap stocks last week may trigger some profit-taking in the following days.
“The market is forecast to experience volatility early next week before continuing its upward trend later at the end of the week,” Bao Viet Securities Co said.
In addition, prolonged net foreign selling will still weigh on market sentiment, SHS forecast. Foreign investors last week net-sold total VND567.5 billion worth of local shares, up about five times from the previous week. — VNS
Commercial banks have six months to fulfill procedures to list their shares on the bourse, as requested by the Prime Minister.
A large amount of cash released in quantitative easing packages by central banks will be an abundant source of capital for the domestic stock market in the near future.