Vietnamese shares are expected to continue rising this week, propped up by a string of positive news for the market and domestic economy.
The benchmark VN-Index increased for a third week with growth of 1.4 per cent last week, ending Friday at 1,017.13 points on the Hồ Chí Minh Stock Exchange (HOSE). It was also the highest landmark since June 12 this year.
On the smaller bourse in Hà Nội, the HNX-Index added 0.4 per cent last week, closing Friday at 116.28 points.
Liquidity also maintained high with an average of 441 million shares worth VNĐ5.83 trillion (US$250.2 million) being traded each session on the two exchanges last week.
A lot of good news was released last week, backing up investor sentiment.
On Thursday, FTSE Russell announced it would include Việt Nam on its watch list for possible reclassification. Việt Nam’s securities market is currently classified as a frontier market. With this decision, the local market will have an opportunity to be upgraded to emerging market status.
The FTSE decision was an acknowledgement of Việt Nam’s efforts to improve market quality, and in the short term, a flock of capital would likely flow into the market to take advantage of this news, according to Nguyễn Nhật Cường, deputy director of the analysis division at the Vietinbank Securities Co.
“However, we don’t expect this capital flow to be enormous,” Cường was quoted as saying on tinnhanhchungkhoan.vn.
It would take time for Việt Nam to satisfy some FTSE criteria, such as foreign ownership limits and permission of free movement of capital/foreign exchange, he said.
If these bottlenecks were addressed, Việt Nam’s securities market may receive about $500-600 million from FTSE and MSCI tracking funds, Cường predicted.
Foreign traders concluded last week as net buyers on the HOSE, picking up shares worth total net value of VNĐ467.6 billion. They were net sellers on the Hà Nội Stock Exchange, however, with a net value of nearly VNĐ40 billion.
The market was also supported by good macro-economic information released on Friday. Gross Domestic Product (GDP) in the third quarter increased 6.88 per cent over the same period of last year. Inflation is likely to stay under 4 per cent in 2018, well in line with the Government’s target for the whole year.
“All this information is supporting the market. After the VN-Index surpassed the 1,000-point threshold, the market trend is expected to go further,” said Nguyễn Hồng Khanh, head of analysis at the Việt Nam Investment Securities JSC.
However, Khanh warned of short-term profit-taking sessions.
“But I think this is good for the market for the time being. The overheating will easily lead to strong selling pressure afterwards,” Khanh said.
Information that might have negative impacts on the market including the US Federal Reserve’s interest rate hike and escalating US-China trade tensions last week.
Among prominent gainers last week were banking-securities, oil and gas, real estate, and textile stocks.