Stocks stay down on low investor confidence

Hanoi (VNA) - Vietnamese shares have had a rough losing week and the next five trading sessions at least are likely to trade negatively, according to analysts and brokerage companies.

The benchmark VN Index on the Ho Chi Minh Stock Exchange and the HNX Index on the Hanoi Stock Exchange respectively inched down 0.2 percent and 0.1 percent to close at 772.08 points and 100.86 points on August 11.

The two stock indices have posted losses of 2.6 percent and 1.5 percent in four consecutive sessions. They also declined by 2.1 percent and 1 percent from the previous week’s closing levels.

The decline has been attributed to investors affected by rising tensions between the US and the Democratic People’s Republic of Korea and by false news about the arrest of a former bank executive on August 9.

The loss in investor confidence as a result of the bad news affected local stocks, bringing the VN Index down 2.3 percent, the biggest loss in the last 20 months, and the HNX Index down 1.2 percent, costing the stock market 2 billion USD in market capitalisation.

Liquidity was quite low in the last two trading sessions of the week after having risen sharply on August 9 on investors’ sell-offs of local stocks.

An average of 307.3 million shares worth 4.72 trillion VND (209.7 million USD) was traded in each session on both local exchanges last week.

The global and domestic bad news also pulled down foreign investment. Foreign investors last week posted a total net buy value of 328 billion VND, a weekly decrease of nearly 55 percent.

The banking sector was the worst-hit among 20 industries on the market as shares of the Bank for Investment and Development of Vietnam (BID) slumped 6.9 percent on August 9, and a total of 10 percent since then.

Other bank stocks also posted sharp declines the same day, remaining negative in the last three trading sessions.

According to analysts and securities companies, there is no sign that the stock market will turn positive this week as investor sentiment remains poor and there is a lack of supportive business news.

Chau Thien Truc Quynh, senior analyst at Viet Capital Securities Company, said that the Vietnamese stock market will undergo a short-term downward trend.

Buyers were still unwilling to make new purchases as they were concerned about market rumours and are likely to wait till these clear up, she said.

The Vietnamese market was also running out of supportive business news as the earnings report season was ending, and it was also being affected by the short-term declining trend in the global and regional markets, Quynh added.

The FPT Securities Company (FPTS) said that the bad news last week had pulled investor confidence down strongly, and it would be hard for them to regain balance very soon. This would affect the two indices negatively, it said.

Sai Gon-Hanoi Securities (SHS) said in its weekly report that the benchmark VN Index would move narrowly between 770 and 776 points on August 14 before breaking this zone and heading to test the 780-point level again.

However, that would be a short-term, unstable technical recovery, SHS warned. “The short-term technical indicators for the index are still in the negative territory, therefore, investors should not limit their purchases.”-VNA