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Low liquidity sparks alarm over withdrawal of capital

Update: April, 28/2014 - 08:44
On HCM City Exchange, the VN-Index rose 2.4 per cent during the week to end at 578.9 points while the HNX-Index on the northern bourse lost slightly by 0.01 per cent to close at 80.5 points.— Photo vnexpress

HA NOI (VNS) —  Shares closed last week sending mixed signals as trade volumes remained low and sent alarm bells ringing about investors feeling insecure and withdrawing capital from the market.

On HCM City Exchange, the VN-Index rose 2.4 per cent during the week to end at 578.9 points while the HNX-Index on the northern bourse lost slightly by 0.01 per cent to close at 80.5 points.

Investor sentiment remained cautious and, coupled with the capital outflow, resulted in liquidity being exhausted during the week, according to Vietstock.vn.

The average trading volume and value on the southern bourse were 77.3 million shares and VND1.37 trillion (US$65.2 million), accounting for 40 per cent and 41 per cent below average figures, respectively, than the previous week.

On Ha Noi Exchange, the trading volume and value averaged 54.8 million shares and VND573.9 billion ($27.3 million), dropping 25 per cent and 30 per cent over the previous week, respectively.

The bottom-fishing of investors was not strong enough on the first trading day of the week, causing stocks to decline for seven consecutive days. Losses from large-caps stocks such as PetroVietnam Gas Corporation (GAS), BIDV (BID), Vietcombank (VCB) and Vinamilk (VNM) as well as stocks of the securities sectors dragged down the benchmark indices.

After witnessing a technical recovery on Tuesday despite petrol price hikes, the market slid again as investors sold stocks, both large-caps and speculative ones, following fears of a bull trap.

The market liquidity hit low mark of the year on Thursday with only 55.7 million shares, worth VND1.18 trillion ($56.1 million), changing hands as a sentiment of caution spread through the market. However, the market posted a slight gain with update of consumer price index. The index increased 0.08 per cent in April.

With supports from large-cap stocks such as GAS, FPT Group (FPT) and Hia Pht Group (HPG), shares maintained a gain on Thursday to end Friday in the black on both bourses.

Although there was capital outflow last week, foreign investors were net buyers of a marginal value of VND391 billion ($18.6million) on both bourses for the second consecutive week, the trend becoming a highlight in a low-liquidity trading week.

Foreign investors mainly bought shares of Vietcombank (VCB), PetroVietnam Gas (GAS), Kinh Do Corporation (KDC) while they sold Hoang Anh Gia Lai (HAG), PetroVietnam Fertilisers and Chemicals Corporation (DPM) and Vingroup (VIC).

According to FPT Securities, as a cautious sentiment ran through the market with sluggish trading with supportive information lacking, the upward trend would not be very strong this week and the benchmark indices might experience trading sessions with losses.

FPT Securities also urged investors to remain cautious and watch the foreign investors' buying and selling activities.

The market will open today and tomorrow before closing for a five-day-long public holiday. As a result, analysts said it would be difficult for the market to witness liquidity improving this week. — VNS

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