Portfolio restructuring of exchange-traded funds (ETFs) continued to have negative impacts on the Vietnamese stock market last week, as shares plunged steeply on both national stock exchanges.
The benchmark VN-Index on the HCM City Stock Exchange slid 2 per cent to below 500 points, closing Friday at 498.84 points, while the VN30 tracking the top 30 shares by market capitalisation and liquidity was down 1.67 per cent at 553.57 points.
Total market volume decreased slightly by 3.2 per cent from the previous week, averaging nearly 64 million shares worth VND1.15 trillion (US$54.8 million) per session.
Heavy sales by the foreign sectors hit blue chips.
Slumps of large-cap shares, including property developers Hoang Anh Gia Lai Group (HAG), Tan Tao Investment Industry (ITA) and VinGroup (VIC), Southern Rubber Industry Co (CSM), dairy giant Vinamilk (VNM), PV Gas (GAS) and insurer Bao Viet Holdings (BVH), pulled the market down.
Foreign investors last week unloaded shares worth a combined VND756 billion (US$36 million), the highest value for a year, of which up to VND360 billion ($17.1 million) worth of shares were sold in Friday’s session.
According to Nguyen Van Quy, an analyst at FPT Securities Co, strong cash withdrawals of EFTs, which started at the beginning of June, coincided with a foreign divestment trend in international markets.
“In Viet Nam, these signs should be seen as profit-taking activities or normal portfolio restructuring of ETFs. To determine whether this will become a trend in the near future or not, we need more time,” Quy wrote in a report.
In contrast with foreign moves on the HCM City market, overseas investors concluded last week as net buyers on the Ha Noi bourse, picking up nearly VND295 billion ($14 million) worth of shares, the highest level in the past 15 months.
However, their net buys failed to rescue the HNX-Index from another fall, dropping 2.08 per cent to close the week’s trading at 64.26 points.
Trading improved slightly with an average of 42.3 million shares, worth nearly VND358 billion ($17 million), exchanged per day.
Analysts expect this week’s trading will be less volatile after ETFs completed their portfolio restructuring on Friday. But they advise local investors to be cautious with possible negative impacts of the current downward trend on the global financial markets
This week, information of inflation data in June will be released with a high probability that it will rise slightly after several months of declines.
“However, liquidity is likely to decline in the first sessions due to investor caution, and the VN-Index will fluctuate around 490 points,” Quy said. â€” VNS