Speculative investments help to counter profit-taking trend

Update: March, 10/2014 - 08:42

HA NOI (VNS) — Although sell-offs occurred last week, the market regained an upward trend after Wednesday, as speculative stocks attracted significant capital inflows.

Benchmark indices closed lower last week on both national stocks exchanges.

The VN-Index dropped 1.15 per cent to end at 579.75 points on the HCM City Exchange, while on the northern bourse the HNXFF-Index ended at 82.16 points, also declining 1.15 per cent.

On the first two trading days of the week, sell-offs occurred due to attractive profits being offered, as well as a lack of supportive information, causing the benchmark indices to close in the red.

Meanwhile, profit-taking occurred on blue chips, such as PetroVietnam Gas Corporation (GAS), Masan Group (MSN), real estate giant (Vingroup), Vietcombank (VCB), PetroVietnam Drilling Corporation (PVD) and Hoang Anh Gia Lai (HAG), dragging down the benchmark indices. The VN-Index and HNX-Index posted huge losses of 2.23 per cent and 3.2 per cent, respectively on Monday, while the losses narrowed on Tuesday's trading session.

Foreign investors had shifted from net buying to net selling during these trading sessions, which also resulted in large pressures on the market.

As net selling reached VND482 billion (US$22.9 million), foreign investors boosted the selling of blue chips, such as Hoang Anh Gia Lai (HAG), PetroVientam Drilling (PVD) and Tan Tao Group (ITA), worrying investors.

FPT Securities officials said that net selling from foreign investors would continue and the market would be in a sideway-up trend to test the 585-590 resistance band.

According to Vietstock Finance, however, bottom-fishing seemingly stimulated the market's recovery on Wednesday, which extended into Friday.

The capital inflow on the three final trading sessions of the week targeted speculative stocks, especially those from the securities and construction sectors, and rotated between sessions.

Liquidity eased over the previous week with the matching values 13.27 per cent and 13 per cent lower, respectively, in HCM City and Ha Noi.

The trading value and volume on the HCM City Exchange averaged 134 million and VMD2.1 trillion ($100 million). On Ha Noi, an average of more than 77.8 million shares changed hands with a total value of VND736.5 billion ($35 million).

The FTSE exchange-traded fund announced last week that Thanh Cong Tay Ninh Sugar Corporation (SBT) would be removed from the stock package of FTSE Viet Nam Index and Hau Gia Pharmaceutical Company (DHG) from the FTSE Vientm All-Share Index, while no stocks were added into the packages. However, this seemingly did not have a strong impact on market transactions due to their low percentages.

Still, according to Bao Viet Securities, the restructuring of investment lists of exchange-traded funds during the two coming weeks would strongly impact the market. The VNM fund was scheduled to announce its investment list on March 15.

According to Le Duc Khanh from Maritime Bank Securities, the Vn-Index would fluctuate with a narrow amplitude of around 580 points this week. He also forecast that the market would witness a recovery at the end of the trading week to exceed the 580-point level. — VNS