Investors remain cautious as New Year approaches

Update: December, 29/2014 - 08:21

An investor watches market fluctuations at the Ha Noi Stock Exchange. — VNS Photo Thai Ha

HA NOI (VNS) — Recovery of blue chips last week helped lift stocks on the HCM City Stock Exchange, despite anticipated cautious trading prior to the long New Year holiday.

The benchmark VN-Index gained a cumulative 1.96 per cent to close Friday's session at 533.37 points.

The VN30, which tracks the top 30 shares by market value and liquidity, also increased 2.07 per cent to end at 582.45 points.

Additionally, the impact of volatile global oil prices began to decline, as many oil and gas stocks recovered in the final session of the week. Following a steep fall on Thursday, large-cap shares, such as PV Gas (GAS) and PetroVietnam Drilling and Wells Service Corp (PVD), climbed 3.7 per cent and 0.8 per cent, respectively, on Friday. Along with other blue chips, including Vietcombank (VCB), Bao Viet Holdings (BVH), Saigon Securities Inc (SSI) and VinGroup (VIC), which reassured investors.

However, liquidity dropped substantially as investors became more cautious before the long holiday, which begins on Thursday.

Also, trading volume declined 43 per cent from the previous week's level, averaging nearly 95 million shares, worth VND2.145 trillion (US$100.2 million) per session in the HCM City's market.

On the other end of the spectrum, the HNX-Index on the Ha Noi Stock Exchange lost 0.23 per cent during the week, finishing Friday at 81.14 points.

The market volume here also decreased 26.5 per cent compared with the previous week, averaging 51.3 million shares and was valued at VND625.2 billion ($29.2 million) per day.

Continuous net buying by foreign investors was a positive sign last week. The foreign sector picked up another VND540.4 billion ($25.3 million) in shares on the two exchanges, of which they were responsible for a net buy value of VND504.6 billion ($23.6 million) in HCM City.

This was the fourth week in a row that the foreign sector were net buyers in the market, with a total net buy value of up to VND874 billion ($40.8 million).

According to many analysts, foreign investors will tend to extend their purchases towards the end of the year. The statistics of BIDV Securities Co (BSC) show that foreign investors actively buy shares in the last week of the year.

In the five years from 2009-13, the foreign sector was net buyers in the final trading week of the year, except in 2011. Records indicate they bought VND381.5 billion in shares in 2009, VND267.4 billion in 2010, VND793.6 billion in 2012 and VND491.3 billion in 2013.

"We believe that the portfolio restructuring of foreign investors is finished and will reduce selling pressure from this sector. Besides, the major markets in the world have strongly recovered after information was released that the US Federal Reserve is considering raising the interest rate in April next year. It's expected to reduce foreign selling and support market growth," BSC wrote in a report. — VNS