Rising foreign investor buys boost market
HA NOI (VNS)— Shares on the HCM City Stock Exchange advanced strongly on Friday largely on the backs of active buys by foreign investors, whose buying outweighed selling by a net of 9 million shares on Friday. They helped lift the VN-Index by a cumulative 3 per cent over the previous week's close to conclude the week's trading at 486 points.
Foreign investor interest was mostly concentrated in such blue chips as PetroVietnam Gas (GAS), Vietinbank (CTG) and real estate developers Tan Tao (ITA) and Hoang Anh Gia Lai (HAG).
Foreign investors have been net buyers on the HCM City exchange for 24 successive sessions. Nevertheless, the overall value of trades slowed during the week, reaching only VND4.3 trillion (US$204.7 million) on a total volume of 311 million shares. The figures represented a decline of about 25 per cent from the prior week.
On the Ha Noi Stock Exchange, without the strong support from foreign buyers, the HNX-Index also retreated by 0.7 per cent to close on Friday at 61.61 points. Trades averaged VND452 billion ($21.5 million) per day, on an average volume of 64.6 million shares, a 30-per-cent decline.
Between Monday and Thursday, the Market Vectors Vietnam Exchange-Traded Fund bought a total of 10.7 million shares, favouring PetroVietnam Technical Service Co (PVS) and property developer Vingroup (VIC).
"The buys of foreign investors in these stocks attracted small investors to follow suit, pulling up indices," commented Kim Eng Securities Co analyst Phan Dung Khanh. "Market liquidity has been affected by the trading of foreign investors since the beginning of the year."
This quarter, Khanh noted, foreign investors will be allowed to acquire an additional 10 per cent in non-voting shares beyond the current ownership limits on foreign investors, possibly affording a boost to the market.
A number of listed companies have actually chosen to delist in order to conclude agreements with foreign strategic partners that would push total foreign ownership in the company beyond the regulated 49 per cent for a listed company. Increasingly, foreign capital has flowed directly to unlisted firms, adding to the crisis in Vietnamese capital markets.
Lifting the ceiling by another 10 per cent in non-voting shares will allow the Government to feel that management control remains in domestic hands. Ministries and sectors had been very supportive of the measure, the State Securities Commission has said. With investors increasingly needing cash for the upcoming Tet holiday, more money is likely to be withdrawn from the market in the coming week, predicted Dong A Securities Co branch director Ly Thanh Nha.
"A lack of new supporting information and the commission's possible identification this week of an investor group which has manipulated share prices could send shares down," Nha said.
On a technical basis, indices are not going to be able to avoid a medium-term correction, said PetroVietnam Securities Co analysts. However, the southern bourse could see a positive scenario if foreign investors continued to be net buyers, they said. — VNS