Stocks stay down on low investor confidence

August 14, 2017 - 03:00

Vietnamese shares have had a rough losing week and the next five trading sessions at least are likely to trade negatively, according to analysts and brokerage companies.

Traders’ inspection before an online bond auction at the Hanoi Stock Exchange. — VNA/ VNS Photo Tuấn Anh
Viet Nam News

HÀ NỘI — Vietnamese shares have had a rough losing week and the next five trading sessions at least are likely to trade negatively, according to analysts and brokerage companies.

The benchmark VN Index on the HCM Stock Exchange and the HNX Index on the Hà Nội Stock Exchange respectively inched down 0.2 per cent and 0.1 per cent to close Friday at 772.08 points and 100.86 points.

The two stock indices have posted losses of 2.6 per cent and 1.5 per cent in four consecutive sessions. They also declined by 2.1 per cent and 1 per cent from the previous week’s closing levels.

The decline has been attributed to investors affected by rising tensions between the US and North Korea and by false news about the arrest of a former bank executive on Wednesday.

The loss in investor confidence as a result of the bad news affected local stocks, bringing the VN Index down 2.3 per cent, the biggest loss in the last 20 months, and the HNX Index down 1.2 per cent, costing the stock market US$2 billion in market capitalisation.

Liquidity was quite low in the last two trading sessions of the week after having risen sharply on Wednesday on investors’ sell-offs of local stocks.

An average of 307.3 million shares worth VNĐ4.72 trillion (US$209.7 million) was traded in each session on both local exchanges last week.

The global and domestic bad news also pulled down foreign investment. Foreign investors last week posted a total net buy value of VNĐ328 billion, a weekly decrease of nearly 55 per cent.

The banking sector was the worst-hit among 20 industries on the market as shares of the Bank for Investment and Development of Viet Nam (BID) slumped 6.9 per cent on Wednesday, and a total of 10 per cent since then.

Other bank stocks also posted sharp declines the same day, remaining negative in the last three trading sessions.

According to analysts and securities companies, there is no sign that the stock market will turn positive this week as investor sentiment remains poor and there is a lack of supportive business news.

Châu Thiên Trúc Quỳnh, senior analyst at Viet Capital Securities Company, said that the Vietnamese stock market will undergo a short-term downward trend.

Buyers were still unwilling to make new purchases as they were concerned about market rumours and are likely towait till these clear up, she said.

The Vietnamese market was also running out of supportive business news as the earnings report season was ending, and it was also being affected by the short-term declining trend in the global and regional markets, Quỳnh added.

The FPT Securities Company (FPTS) said that the bad news last week had pulled investor confidence down strongly, and it would be hard for them to regain balance very soon. This would affect the two indices negatively, it said.

Sài Gòn-Hà Nội Securities (SHS) said in its weekly report that the benchmark VN Index would move narrowly between 770 and 776 points on Monday before breaking this zone and heading to test the 780-point level again.

However, that would be a short-term, unstable technical recovery, SHS warned. “The short-term technical indicators for the index are still in the negative territory, therefore, investors should not limit their purchases.”

VN30 futures

The derivatives market officially opened on Thursday and two trading sessions were conducted last week with a total of 1,102 transactions worth VNĐ82.5 billion.

The movements of the VN30 futures contracts, which reflect investor expectations, showcase low investor confidence.

The movement of the VN30 Index normally has big impacts on the local stock market as it tracks the performance of the 30 largest listed companies by market capitalization, including Vinamilk, Vietcombank and PetroVietnam Gas.

But analysts said that the movement of the futures contracts is likely to have minimum effects on the market as the scale of Việt Nam’s derivatives market is small and it is not linked directly to the stock market. — VNS