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Profit-taking drags down national indices
The market advanced in the first three sessions of last week, but weakened towards the end of the week as profit-taking pressures increased with the VN-Index moving near the resistance level of 600 points.
On the HCM Stock Exchange, the benchmark VN-Index lost an accumulative 1.12 per cent to close Friday at 582.77 points. The VN30, a tracker of the top 30 shares by market value and liquidity, also declined 0.62 per cent to end at 627.10 points.
The petrol price hike early last week did not have a negative impact on the market, as expected, but rising profit-taking pressures pushed the market down.
Stocks were under heavy selling pressure, included blue chips, such as Masan Group (MSN), PV Gas (GAS), Bao Viet Holdings (BVH) and Hoang Anh Gia Lai Co (HAG), along with hot stocks of securities, construction and real estate groups.
Foreign investors also unloaded local shares last week. They were responsible for a modest net sell value of VND14.3 billion (US$678,000), the first week of net selling after many consecutive weeks of net buying.
Though liquidity declined in the final sessions, overall market volume increased slightly over the previous week.
The daily trading volume rose 3.6 per cent, averaging 113 million shares, and fund certificates were worth VND1.73 trillion ($82 million) per session.
According to many analysts, this downward correction was anticipated by investors, as they know the higher the stock indices climb, the stronger the selling pressures become.
"The decline was primarily driven by short-term profit taking and it gave investors opportunities to restructure their portfolios. However, as foreign investors went back to selling shares, it would be more difficult for the market to recover," said Nguyen Van Quy, analyst of FPT Securities Co.
Quy said if nothing unfortunate happened, downtrends would continue in the first sessions of this week, and bounce back when the Index was around 570 points.
On the Ha Noi Stock Exchange, with one one rising session during the total five trading days, the HNX-Index gave up more than 1 per cent to end Friday's session at 78.62 points.
Selling pressure focused on speculative stocks, such as PetroVietnam Construction Corp (PVX), Sai Gon Thuong Tin Real Estate Co (SCR), Kim Long Securities Co (KLS) and Sai Gon Ha Noi Securities Co (SHS), as these shares gained substantial value during the past period.
Also, liquidity dropped as the daily market volume reached nearly 66 million shares, worth VND741.1 billion ($35.1 million), down 8.4 per cent from the previous week.
Foreign investors unexpectedly became net buyers here. They picked up combined shares worth VND107.2 billion ($5.1 million). Their buys focused on penny stocks such as PetroVietnam Technical Services Corp (PVS), VNDirect Securities Co (VND) and cigarette manufacturer Dabaco Group (DBC).
According to analysts from SHB Securities Co, the market tends to fluctuate in a narrow range in June and July due to a lack of support information during this period.
"The current trend remains upward in the short term, but the market still needs time to accumulate value for a stable rise," they said, noting that the differentiation would happen when companies start to release their first-half corporate earnings results.
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