No Signs for Recovery This Week, Say Brokers

Irrespective of positive performance on global stock markets after Greece scrapped the referendum on the European bailout plan, domestic investors seemed to remain cautious and bearish despite the southern bourse’s closing up last Friday.

APEC Securities Co. said investors seemed to lose their confidence as the VN-Index performed badly while the Vietnam Securities Depository had suspended SME Securities Co.’s depository operations for a month. This may urge pessimistic investors to close their accounts at small brokerage companies.

“The market in general was still in short and medium-term downtrend. It only saw short-lived speculative rising streak and the rally streak officially ended last week. We therefore suggest investors to consider offloading stocks to recover capital and wait for a better time to come back,” the broker said.

Fiachra Mac Cana, managing director of HCMC Securities Co, meanwhile, singled out bank stocks in his comments.

He noticed that leading lender ACB’s core lending and fee business remains strong as it is being well managed and supported by central risk management coupled with a formidable deposit raising capability and a strong branch network. However, their other lines have been faltering for some time with the securities business a clear drag on performance, he commented.

“However, we note that ACB had an “other asset” line item of VND25.9 trillion as of the end of September. This appears to be a trust investment in gold and then other receivables in gold. However, we don’t have any other details about this at this stage. Although the bank is quite conservative in its core lending activity, this “other asset” position does lead us to worry a little bit about their overall balance sheet asset quality,” he said.

“Leaving aside foreign ownership restrictions for the time being we prefer EIB and VCB in the sector but would recommend investor stay underweight for the time being. Perhaps investors can also look at Military Bank on weakness over the next few months,” he added.

The Hanoi market also declined last week with up to four falling sessions. The HNX-Index lost 3.97 points, or 5.68%, from a week earlier to 65.97. The market’s liquidity rose sharply with the average daily volume of 37.4 million shares worth VND399 billion, down by 29% and 39.5% respectively. It is expected to move in a narrow range or decline this week.