HÀ NỘI – Trading is set to remain quiet with lower liquidity this week as investors tend to keep their accounts secure ahead of the year-end holiday.

Both local market indexes were volatile last week and ended lower than the previous one as investors avoid making risky decisions at the end of the year.

The benchmark VN Index closed Friday at 664.37 points, down 1.6 per cent from the previous week.

The HNX Index on the Ha Noi Stock Exchange fell 0.8 per cent week on week to finish Friday at 79.08 points. The northern market index has lost 1.5 per cent over the last two sessions.

Most of the sectors saw big declines from a week ago. The consumer industry index dropped 5.2 per cent after rising strongly before, driven by the brewer Sai Gon Beer, Alcohol and Beverage Corporation (SAB). The energy sector was the second worst declining business with a decrease of 2.8 per cent.

An average of nearly 152 million shares was traded each day, worth VND2.73 trillion (US$121.5 million). The figures were down 21.6 per cent in trading volume and 8.5 per cent in trading value compared to the previous week.

The stock market indexes would recover slightly but trading liquidity wouldremain very low, said Dương Văn Chung, MB Securities Company’s head of investment division.

"The year-end period is the time when financial services companies and listed firms operate perfunctorily to prepare for their annual reports, thus, investors will not be allowed more margin lending until the new year begins," he said.

In fact, market trading liquidity declined significantly by 30 per cent from the previous weeks’ average, said Nguyễn Hữu Bình, Vietnam Investment Securities Company’s (IVS) head of market analysis division.

The money had flown out of the stock market to seek other opportunities in foreign currency trading as also firms that are preparing to list. Investors were not very active because stocks were not attractive enough, weighed down by the potential of year-end risks, he added.

Echoing such analsyses, Bùi Nguyên Khoa, BIDV Securities Company’s head for macroeconomic market operations, said capital flow was weak during this period because of concerns over foreign investment withdrawing from listed firms to seek chances in about-to-list companies, making domestic investors wanting to preserve their money.

Foreign investors recorded a net sales value of VND105.23 billion last week on the two local exchanges, focusing on large-cap stocks like Vingroup (VIC), dairy producer Vinamilk (VNM), Bank for Investment and Development of Viet Nam (BID) and VNDirect Securities Company (VND).

“The stock market will not likely see any improvements as foreign investors continue to offload their ownership in local companies and the market itself lacks good business information to draw attention from domestic buyers,” Khoa said.

Some analysts said the market was set to rise and it would be supported by performance reports of listed companies.

“It will not be easy because the supply exceeds demand, thus the money will concentrate on industries with high prospects,” said Nguyễn Hữu Bình, an analyst at IVS.

For example, steel company stocks would rise on their positive performances and tightened regulations on imported steel products, he said, adding that it would allow those companies to pay higher dividends. – VNS