HÀ NỘI – The recent volatility of global stocks and the outflow of foreign capital have dampened investors’ confidence in Vietnamese shares in the past few weeks and the troubles are forecast to last into the near future.

The benchmark VN Index on the HCM Stock Exchange gained 0.36 per cent to close at 960.78 points on Friday.

The HNX Index on the Hà Nội Stock Exchange declined for a fourth straight day, losing 0.83 per cent to end at 106.17 points.

The VN Index and the HNX Index finished the week 2.3 per cent and 5.2 per cent lower than the previous week’s end, respectively.

Trading liquidity on the two local exchanges fell on a weekly basis to some 190.4 million stocks worth VNĐ4.5 trillion (US$197.4 million) being traded in each session last week.

According to analysts, the local market will face further difficulties as investors continue worrying about the rising tensions between China and the US, which could lead to a large-scale trade war between the two largest economies and have negative impacts on global stock markets.

Foreign capital outflow is another concern as foreign investors have kept net-selling Vietnamese shares in response to the appreciation of the US dollar against other currencies after the US Federal Reserves raised interest rates on June 14 and signalled two more hikes will come later in 2018.

The exchange rate between the Vietnamese đồng and the dollar has been on rise in the last two weeks, touching a high of VNĐ23,000 per dollar.

Foreign investors last week net-purchased total VNĐ2 trillion worth of Vietnamese stocks, including VNĐ2.2 trillion worth of put-through deals for shares in the media firm Yeah1.

If the net-purchase of Yeah1 was not included, foreign investors posted VNĐ329 billion worth of net selling last week. They net-sold VNĐ594 billion in the previous week.

The risk of a further correction remains high, according to securities firms. The stock market will likely be highly volatile this week.

Sài Gòn-Hà Nội Securities Company said in its weekly report that capital had not returned to the stock market, given the depleting liquidity and high volatility, and it proved investors are cautious and have become less attracted to the stock market.

Low market sentiment kept investors uninterested in buying stocks even though listed firms have released early earnings forecasts for the second quarter of the year and the macroeconomy has remained stable in the first half.

The General Statistics Office (GSO) last week announced the country’s gross domestic product (GDP) was estimated to grow by 8.08 per cent in the first six months. It was the highest six-month growth rate since 2011.

Vietcombank has estimated its six-month pre-tax profit rose 52.7 per cent year on year to VNĐ7.72 trillion, but its shares fell 1.2 per cent last week with low demand.

Declining liquidity has also damaged expectations for the earnings of securities firms such as Saigon Securities Inc (SSI), VNDirect Securities (VND) and HCM City Securities (HCM). The three stocks dropped between 7.3 per cent and 9.8 per cent last week.

Oil and gas (energy) stocks recorded modest gains despite being supported by the increase of crude prices. The US benchmark West Texas Intermediate (WTI) was up 8 per cent last week and Brent crude gained 5 per cent.

Crude prices are forecast to keep increasing this week following US sanctions on Iran and disrupted supply in Canada, Libya and Venezuela. Crude prices are expected to touch $90 a barrel.

The VN Index may continue to settle in the range of 950-1,000 points this week as it has done in the last eight sessions, SHS said.

Technical indicators signalled high risk that the market would fall further in the coming week as blue-chip stocks continued to weaken, according to FPT Securities Company (FPTS). This may be the reason investors have stood aside rather than buying, and they are expected to remain cautious. – VNS