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Market ends three-month rally
Accelerated profit-taking and returned investor caution put the brakes on share prices on the HCM City Stock Exchange, causing the VN-Index to experience its first declining week following three straight months of increases.
The Index lost 34.37 points overall to end the week at 475.22, a fall of 13.6 per cent over the previous Friday’s close.
Trading volumes remained significant, averaging at 58.1 million shares per day, but down 13 per cent over the previous week’s average. Daily turnover averaged at VND2.2 trillion (US$123.6 million), a decline of 12 per cent.
In Ha Noi, the HASTC-Index followed suit, closing at 167.86 on Friday after losing 15.06 points – or 8.23 per cent – during the course of the week. The average daily volume fell by 29 per cent to 29.9 million shares per day, while daily revenues averaged about VND1.1 trillion ($61.8 million), down 31 per cent.
Tourism and entertainment shares saw the sharpest drop during the past week, according to FPT Securities Co data, plunging 16.6 per cent, followed by retail goods, down 13.26 per cent; and telecommunications shares, off 10.46 per cent.
After three consecutive months of increases sent prices soaring, accelerated profit-taking sent the indices back down this week, said Tran Duy Ngoc of the FPT Securities brokerage department. Global stock markets also slowed and foreign investors generated greater net sales, further contributing to market developments.
Foreign investors showed only modest activity last week, responsible for the trade of only 26.1 million shares. They finished the week as net sellers of 6.2 million shares, with a net value of nearly VND180 billion ($10.1 million).
Recent news about organisations, listed companies and inside shareholders selling off shares also significantly affected market moves, said Ngoc. For instance, Dragon Capital registered to sell 5.3 million shares of Refrigeration Electrical Engineering Corp (REE), and Sai Gon General Service Corp (SVC) registered to unload about 200,000 of its shares.
Automotive shares rose the most during the week, up 4.08 per cent, followed by insurance shares, up 3.85 per cent.
Moves in insurance shares were remarkable, as Bao Minh Insurance (BMI) and Viet Nam National Reinsurance (VNR) generated significant trades and hit highs during the last two days of the week. "As we observed, some investors were buying up these shares to wait on the positive effects of the upcoming listing by the Bao Viet Finance-Insurance Group," said Ngoc.
Ngoc said the domestic stock indices were expected to continue to see downward adjustments in the coming week, and he predicted that trading volumes would continue to decline against some previous weeks, "as both buyers and sellers have now become cautious."
But, he added, declines in indices would be insignificant during this consolidatory period, and he predicted that the VN-Index would range between 465 and 485 this week.
HCM City Securities Co waxed a bit gloomier in a report predicting that the VN-Index might fall to as low as 400 in July. However, developments in world markets – which were "an unknown" – might help prop up the domestic exchange, the brokerage said.
Ngoc suggested investors reduce their share holdings to 30-50 per cent of their portfolios during this "sensitive time".
Ngoc said a bright point was that capital was still flowing into the market, businesses were expected to show satisactory second-quarter business results, and the upcoming listings by major banks Vietcombank and Vietinbank were drawing investor interest.
"With banks showing impressive results during the first half of the year, I believe that the listing of these two major banks will positively affect the market," agreed Vu Viet Ky, head of the Mirae Asset Securities Co brokerage department.
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