HA NOI (VNS) — Vietnamese stocks may not see significant improvements this week, as the local market faces large-scale divestments by foreign investors from local companies, brokerage firms wrote in their weekly reports.
Last month, foreign investors divested VND1 trillion (US$44.4 million) from Vietnamese companies, brokerage VNDirect Securities JSC (VNDirect) reported.
Also, foreign investors made total divestments last week of VND942.4 billion ($42 million) on both local markets. The largest selling was seen in food manufacturer Kido Joint Stock Company (KDC), at VND127.7 billion ($5.67 million).
In three of the Southeast Asian markets – Thailand, Philippines and Indonesia – foreign investors withdrew some $5 billion during the last quarter, as they became cautious about the possibility of a weakened Chinese yuan and increased interest rates set by the US Federal Reserve Bank at the end of this year, VNDirect said.
On Friday, the benchmark VN Index on the HCM Stock Exchange fell 0.2 per cent to end at 562.31 points. Therefore, the index dropped 1.4 per cent compared to the previous week.
On the Ha Noi Stock Exchange, the HNX Index gained 0.3 per cent to close at 78.25 points on Friday. However, the index lost 0.5 per cent compared to the previous week.
The most important impact on the market last week came from the decision by the State Bank of Vietnam (SBV), which raised the interest rate for US-dollar-saving accounts from 0.75 per cent to 0.25 per cent for individuals and 0.25 per cent to 0 per cent for companies.
That move hit the financial sector, especially bank shares, which lost 1.9 per cent on Monday and 2.3 per cent throughout the entire week. All nine listed banks declined, especially the three largest banks on the stock market - Vietcombank (VCB), the Bank for Investment and Development of Vietnam (BID) and Vietinbank (CTG) – which fell 2.3 per cent, 2 per cent and 1.5 per cent.
The fall of bank shares hit both local indices, in which the HNX Index ended its eight-day winning streak that saw the northern index jump 2.7 per cent. The SBV's decision actually made two local indices extend their losses on Tuesday.
On Wednesday, the market recovered slightly on some positive markets and due to macro-economic news, including a new settlement timeframe that would be applied by the State Securities Commission to reduce settlement time for trading transactions from three days (T+3) to two days (T+2) beginning in January 2016, and the country's GDP in September was 6.5 per cent, a five-year high.
In the final four trading sessions of last week, the market was "on hold" with quiet market trading, as investors were waiting for the finalised agreement between 12 countries, including Viet Nam, at the free-trade Trans-Pacific Partnership (TPP) talks held in the US city of Atlanta.
After the last talks failed in July, the latest discussions between participating countries succeeded in reaching agreement on the import of autos and car parts from Asian countries.
Local companies that operate in the auto industry were gainers during the last three sessions, due to the progress made at the TPP talk. The mechanic sector was up 3.2 per cent, the highest among 23 sectors on the market.
Also, local producer TMT Motor JSC (TMT) was up 9.7 per cent, Sai Gon General Service Corp (SVC) gained 12.9 per cent and Hoang Huy Investment Services (HHS) rose 5.6 per cent.
However, participants at the TPP talks were unable to reach agreement on food products, which hurt local manufacturers such as Vinamilk (VNM) and Ma San Group (MSN). Both stocks remained flat at the end of last week.
Market trading last week reached 584.6 million shares in volume and VND8.87 trillion ($394.3 million) in value, a decrease of nearly 20 per cent from the previous week. — VNS