All eyes on Sabeco shares

Both local markets closed down last week, extending their losing streaks for a second week in a row on investor caution amid the portfolio review of exchange-traded funds (ETFs).

Both the benchmark VN Index on the HCM Stock Exchange and the HNX Index on the Hanoi Stock Exchange fell on December 15to finish last week at 935.16 points and 111.61 points, respectively.

The two stock indices dropped a total of 0.5 percent and 1.9 percent last week, making their total decline in the past two trading weeks to 3.6 percent and 4.4 percent.

In general, the benchmark VN Index has increased by 40.6 percent since last December 30, and the HNX Index has risen 39.3 percent during the same period.

An average of 246 million shares was traded in each of the five sessions last week, worth 5.07 trillion VND (225.4 million USD).

The trading figures accounted for 88.6 percent and 87 percent of the previous week’s average daily volume and value.

Increased selling pressure and rising investor caution amid ETFs’ portfolio restructuring were the two main reasons the indices fell lower last week.

Selling pressure focused on large-cap stocks, which often play an important role in driving the stock market.

Foreign investors last week recorded a net sell value of total 460 billion VND on both local exchanges. They had made a net buy value of a total of 1.15 trillion VND in the previous trading week.

Financial and banking stocks were among those hit by strong selling-out pressure. Leading shares in the financial-banking sector, such as Vietcombank (VCB), Bank for Investment and Development of Vietnam (BID), Vietinbank (CTG) and insurer Bao Viet Holdings (BVH), were down between 2.2 percent and 10.8 percent.

Other large-cap stocks that also underperformed were food and beverage Masan (MSN), property developer Vingroup (VIC) and FLC Ros Construction Corp (ROS).

Mr. Nguyen The Minh, deputy director of research and investment at Saigon Securities Inc (SSI), said the market would move sluggishly in the next two weeks as it was under heavy pressure from the volatility of large-cap stocks. The inflow of money was limited by securities firms’ margin calls.

Investor sentiment had shown improvement because of major market news that could have big impacts on stock movements, such as the US central bank’s interest rate hike and the ETFs’ portfolio review, and a part of margin lending has been diminished, Agribank Securities Company’s (Agriseco) head of brokerage, Nguyen Ngoc Lan, told the news site tinnhanhchungkhoan.vn

Ms. Lan said those factors had led to the downturn of investor confidence and the decline of market trading liquidity in recent weeks, adding that “fresh money” from both domestic and foreign investors was expected to boost the market.

Both analysts suggested investors hold onto an investment portfolio that has 50 percent in cash and 50 percent in assets with a focus on companies that could release good earnings for the fourth quarter of the year, such as real estate, steel production and pharmaceutical firms.

The Ministry of Industry and Trade, on behalf of the Government, will offer more than 343.6 million shares or 53.59 percent of the largest brewer Sabeco (SAB) for sale on December 18 at the starting price of 320,000 VND per share.

Analysts and investors are expecting the share sale will help lift the stock market as Sabeco is the second largest company by market capitalisation and the highest share price. Its movement has big impacts on investor sentiment and market trading directions.

If successful, it will defy expectations thatthe ministry and the Government may not be able to sell shares much higher than the initial auction price of 320,000 VND, Ms. Lan at Agriseco said.

“In that case, Sabeco shares will lead the market up strongly and keep investor confidence positive," she said.Sabeco shares closed December 15 at 309,200 VND per share, about 3.4 percent lower the auction price of 320,000 VND per share.

SSI analyst Nguyen The Minh said the major concerns for strategic investors like Thai Beverage (ThaiBev) were the prospects of Sabeco in particular and of the Vietnamese beer industry in general.

“If the auction is successful, the foundation pricing of the consumer sector and the whole market will be raised and next Government’s stake sales will receive better attention, thus bringing more opportunities for the Vietnamese stock market,” Mr. Minh said.