|The Index has slumped almost 9.3 per cent in the last three weeks. — Photo wooricbv.com
HA NOI (VNS) — Most stock analysts maintain a neutral view on the market's outlook this week, which remains very volatile after being hit hard by currency devaluations from the Chinese, and then Vietnamese central banks, last week.
The benchmark VN-Index on the HCM Stock Exchange lost a cumulative 2.44 per cent last week, closing Friday at 589.03 points and extending losses to three weeks in a row.
The Index has slumped almost 9.3 per cent in the last three weeks.
On the Ha Noi Stock Exchange, the HNX-Index dropped by a more substantial 3.57 per cent to end the week at 80.88 points. The gauge here has dived more than 6 per cent in the past three weeks.
Liquidity, however, increased slightly over the previous week, as daily trading volume in HCM City's market rose nearly 6 per cent to an average 108 million shares, worth over VND2.1 trillion (US$96.3 million) per session.
Similar figures in the Ha Noi market were more modest, averaging nearly 46 million shares worth VND521.3 billion ($23.9 million) per day.
Meanwhile, both markets performed well on Monday following information that the State Securities Commission would hold a conference on Thursday to provide details on Decree 60, which allows higher foreign ownership limits in public companies.
However, shares began their downward spiral after the People's Bank of China allowed the yuan to fall by 1.9 per cent on Tuesday. The yuan's devaluation took the market by surprise, continuing for another two days. Most regional currencies and global stocks slumped after China's surprise action.
The yuan lost nearly 5 per cent in value in just three days, ending on Thursday.
The State Bank of Viet Nam, however, took prompt action, as it increased the dong's trading band by 1 per cent on Wednesday to diminish the negative impact of China's currency devaluation. Though the Vietnamese central bank's move was expected, the unusual information hit investors' psychology, causing them to become skeptical about the market's outlook.
The slump spread from large-cap shares, which fell by over 3 per cent during the week, on average, to the entire market.
According to financial website vietstock.vn's data, 19 of 23 sectors saw losses, of which hospitality and entertainment services registered the strongest decrease of 8.2 per cent, on average. The mining sector also fell nearly 6 per cent, followed by banks at 4.3 per cent; construction, 4 per cent; and real estate at 3.5 per cent.
Yet, insurance and securities companies bucked the trend, increasing 3.2 per cent and 0.4 per cent, respectively.
"Recent developments in world currencies is putting pressure on domestic market corrections. However, as we observe, this pressure decreased towards the end of the week and investors are adopting the changes," analysts at Bao Viet Securities Co wrote in their latest report.
They further believe that there was a chance for the two exchanges to rebound this week after a sharp decline and suggested investors watch the stocks which posted positive business results and would likely benefit from higher foreign participation in companies.
Further, according to analysts at Maritime Bank Securities Co, the market would likely slowdown and need time to accumulate valuation after the two-month rise in late May-July.
They predicted the VN-Index would rebound in the first two sessions this week, but continue its correction phase in the following sessions.
"The VN-Index will likely move around 580-585 points this week," they wrote in a report. — VNS