The local stock market will likely move sideways before the US Federal Reserve (Fed) meeting, as investors are anxious about the prospect of higher interest rates in December – a move seen as likely, according to most market experts. — VNA/VNS Photo

HÀ NỘI — The local stock market will likely move sideways before the US Federal Reserve (Fed) meeting, as investors are anxious about the prospect of higher interest rates in December – a move seen as likely, according to most market experts.

The Fed meeting, scheduled for December 13-14, will be decisive for world markets, and analysts predict an interest rate increase of one percentage point for the whole 2017.

According to a skeptical scenario, the Fed might hike interest rates to 1.75 per cent this month and, gradually, to 2.75 per cent towards the end of 2017. With such a sharp increase, foreign investors are forecast to continue withdrawing capital from emerging markets, including Việt Nam.

In the three weeks after Donald Trump was elected as the next US president, US$72 billion worth of foreign capital was withdrawn from emerging markets, while some $45 billion were channeled into the US stock market, Bloomberg data indicated.

In Việt Nam, foreign investors extended their selling streak to four consecutive weeks on the main bourse in HCM City, for a total value of nearly VNĐ2.9 trillion ($127.7 million).

Since the beginning of this year, the foreign sector was responsible for a net sell value of VNĐ6.5 trillion in the local stock market, while they bought a total net buy value of VNĐ2.64 trillion in the same period last year, Nguyễn Đức Hùng Linh, analysis director at Saigon Securities Inc, said in an online meeting on bizlive.vn.

However, Linh said foreign net selling focused on shares of real estate developer VinGroup (VIC), which was valued at VNĐ6.3 trillion. If removing the impact of VIC, foreign net sells reached some VNĐ254 billion, an insignificant number.

Linh predicted foreign investors would continue trimming their investments in Việt Nam and, in a negative scenario, they would probably divest capital from the local securities market.

“The market will likely incur cautious movement on low liquidity prior to the Fed meeting. The VN-Index may extend its rally, but the market will still experience a divergence and is unlikely to gain across the board, Trần Đức Anh, a stock analyst at Bảo Việt Securities Co, wrote in a note.

Meanwhile, the VN-Index was poised for a weekly gain of 0.3 per cent, while the HNX-Index slumped by over 1.9 per cent.

A small increase in the VN-Index was largely attributed to robust gains by brewery giant Sabeco (SAB), whose share price climed 46.8 per cent in just four trading sessions, from VNĐ110,000 per share on its debut day on Tuesday to VNĐ161,500 each on Friday.

Overall market conditions were negative, as the number of declining shares outnumbered gaining shares.

Also, liquidity weakened, as an average of nearly 134 million shares valued at VNĐ2.64 trillion were traded in each session of the HCM Stock Exchange, down 10.5 per cent from the previous week’s level.

A similar figure was seen on the Hà Nội Stock Exchange, with the daily trading volume reaching 53.5 million shares, worth VNĐ484.5 billion. — VNS