HÀ NỘI – Vietnamese shares may continue declining this week, as investors display more caution after the markets declined over the last four days and as investors await news from the US central bank’s meeting on possible interest rate increases.

The benchmark VN Index on the HCM Stock Exchange on Friday closed down 1.5 per cent at 649.87 points, while the southern market index finished 2.2 per cent lower than the previous week, and witnessed a four-day decline of 3.5 per cent.

The HNX Index on the Hà Nội Stock Exchange edged down 0.7 per cent to end the week at 84.07 points. Meanwhile, the northern market index slid 3.4 per cent in the last four sessions and ended 3 per cent lower than the previous week.

“Investors have become cautious after the stock market’s recent declines,” noted Ngô Thế Hiển, head of market analysis division at Sài Gòn-Hà Nội Securities Corp (SHS).

It could take two or three weeks before the stock market find its balance point, he added.

“Investors’ cautious sentiments have resulted in the rotation of cash flow among stocks that announced positive corporate news, such as adequate second-quarter earnings and dividends, and that is only for investors’ short-term profits,” Hiển said.

However, speculative mid-cap and small-cap stocks could harm investors’ profitability, due to poor companies’ fundamental financial and administrative foundations.

Further, the stock market is signaling more risks for investors and it could possibly continue to slide in the short-term, Nguyễn Thế Minh, head of market analysis division at Việt Capital Securities Corp (VCSV), said.

Recent declines are seen as normal, as investors attempt to take profits from stocks that have risen strongly, especially those that have a price-to-earnings ratio (P/E) up by 17 or 18, Minh said.

Minh also suggested that investors should not count on speculative mid-cap and small-cap stocks, as those stocks are very risky for investors.

The focus this week will be on the US Federal Reserve Bank’s meeting on Wednesday, in which investors believe that the central bank will likely keep its interest rates unchanged for July, following Britain’s vote to leave the European Union late last month, and during the US election period.

Last week, the reference mid-point rate set by Việt Nam’s central bank closed Friday at VNĐ21,881 per dollar, after reaching the one-month high of VNĐ21,895 per dollar on Thursday. Additionally, the mid-point rate increased by VNĐ17 from the previous week’s value.

Foreign investors have recorded total net buying of VNĐ915 billion (US$40.67 million) on both local exchanges in the last two weeks. Rising exchange rates between the dollar and the đồng could trigger foreign selling this week if foreign investors find their investments generate acceptable profits.

Lower oil prices will also be a factor that investors must take into account this week, especially after oil prices had been volatile during the past month.

US crude West Texas Intermediate (WTI)  slipped 1.3 per cent on Friday to close at $44.19 per barrel, totaling an 11.4-per-cent drop since June 29.

Also, London-traded Brent crude on Friday fell 1.1 per cent to close at $45.69 per barrel, declining 9.7 per cent since the end of last month.

Investors last week traded more than 185 million shares each trading day, worth VNĐ3.23 trillion, a decrease of 22.4 per cent in value and 17.4 per cent in volume from the previous week. – VNS