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Stocks stuck in holding pattern
Analysts at a number of brokerages predict the Vietnamese stock market will continue to tread water in the opening days of August, as risk-averse investors continued to flee the market.
Analyst at FPT Securities Company said that, although the market was cheered by two rising sessions at the end of last week, the gains were attributed to a technical correction after several declining sessions and that there was no solid basis to expect an uptrend this week.
"Indices rose on low market volume and value," they wrote in a market report. "In the long term, the market needs more supporting information and time for investors to regain their faith."
Without supporting news, investor confidence in a market uptrend was weakening on the back of a prolonged bear market and low capital investment, said the head of SME Securities Co's brokerage department, Phan Anh Tu.
While the stock market needed to attract VND30-40 trillion (US$1.6-2.1 billion) in new capital, several large investors were withdrawing investment.
The HCM City market alone has recently absorbed 1.3 billion new shares, while the exchange said it had approved requests by 16 companies to list a combined 496 million shares and was processing the listing documents of 11 more companies preparing to list a combined total of 813 million shares. Meanwhile, major institutional investors like Vinalines, Vinashin, and PetroVietnam unloaded shares last week.
"As the current market cannot provide quick profits, many investors have decided to sit it out and wait for clearer signals," said Tu.
Over the course of last week, weakened investor confidence caused shares to tumble on the HCM City Stock Exchange, with the VN-Index losing a net of 1.28 per cent from the previous week's close to end Friday's session at 493.91.
An average of 42 million shares changed hands per day, worth an average of VND1.24 trillion ($65.3 million) – a decrease of over 6 per cent in both volume and value from the previous week.
Refrigeration & Electrical Engineering (REE) was the most active share on the southern bourse, with an average of 1.8 million traded per day. REE shares lost 5.1 per cent of their value during the week, closing on Friday at VND18,600 ($0.98).
On the Ha Noi Stock Exchange, the HNX-Index fell by an even more substantial 2.95 per cent to end Friday's session at 153.33 points. The value of trades dropped by nearly 18 per cent to a daily average of about VND1 trillion ($52.6 million), with volumes averaging 35.3 million shares per session.
Though PetroVietnam Construction (PVX) returned as the most heavily-traded share nationwide with an average of 3.7 million traded per day, it lost 3.18 per cent during the week to close at VND27,400 ($1.44).
"Investment in blue chips has declined this year and mid-and small-cap stocks are attracting investor interest," said Vincom Securities Company Deputy Director Phan Anh Tuan. The Ha Noi bourse, jam-packed with such shares, has become the playground for speculative investors, reflected in trading values and volumes now nearly on a par with the larger HCM City bourse.
Bao Viet analysts said the market would only develop stably if it received broad new investment in sound shares, instead of the churning of penny stocks the market was seeing now.
Foreign investors concluded last week as net sellers on the HCM City market for a total value of over VND46 billion ($2.4 million). They continued as net buyers on the Ha Noi market, although only marginally, picking up a net of VND5.5 billion ($290,000) worth of shares.
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