Investors follow transactions at Tan Viet Securities Company in Hanoi (Source: VNA) Vietnamese shares extended declines for a third trading session in a row as a bearish oil price forecast from a top US investment bank undermined investor confidence in local energy companies.
The benchmark VN Index on the Hochiminh Stock Exchange was down 0.8 percent to close at 562.17 points.
The HNX Index on the Hanoi Stock Exchange decreased by 0.9 percent to end at 76.8 points.
Both local bourses have lost nearly 1.8 percent for the last three days.
The reasons for the declining market on September 14 included a negative forecast published by US investment bank Goldman Sachs for global oil prices.
Goldman Sachs predicted that the price US benchmark West Texas Intermediate crude could fall to 20 USD per barrel by the end of this year in a worst case scenario. Goldman also lowered its forecast for next year's oil price to 45 USD a barrel from 57 USD a barrel.
The decline of global oil prices has come amid a rise in output by the Organisation of Petroleum Exporting Countries and other energy exporters such as the US and Russia, which may continue next year while demand may decline.
WTI crude traded at 44.52 USD per barrel on September 14, a slight decrease of 0.3 percent from September 11 and a decrease of 9.5 percent after it hit the one-month high of 49.2 USD per barrel at the end of August.
As a result, Vietnamese energy shares fell including Petrovietnam Gas Corp (GAS), Petrovietnam Drilling & Well Services (PVD), Petrovietnam Coating Co (PVB) and Drilling Mud Corp (PVC) which lost 2.2 percent, 1.7 percent, 2.7 percent and 3.5 percent, respectively.
In addition, the market's decline was also caused by the US-based Market Vector VNM ETF (VNM ETF) and the Euro-based FTSE VNM ETF (FTSE ETF), which will adjust their investments in Vietnam's market for the fourth quarter of this year.
"The market is now declining as the ETFs will likely sell large volumes of big companies on the market such as Bao Viet Holdings (BVH), Ma San Group (MSN) and Vietcombank (VCB)," brokerage VNDirect Company reported.
The moves in the two funds made investors lose confidence in those shares and threatened these shares with large sell-offs, VNDirect reported, adding that the brokerage firm would reduce its investments in those shares.
The reason for these funds making that move is the possibility that the US central bank will likely raise the interest rate for the US dollar in the coming meeting on September 16-17, making foreign investors in Vietnam withdraw their investments to avoid suffering losses.
Last week, VNM ETF announced that the US-based fund would increase its investment in four local stocks, including 34.8 million USD for the Bank for Investment and Development of Vietnam (BID) and 15.4 million USD for Nhon Trach 2 Power Co (NT2), while selling its stakes in some others such as 8.9 million USD in Vietcombank (VCB), 3.1 million USD in Ma San Group (MSN) and 4.8 million USD Bao Viet Holdings (BVH).
As a result, VCB fell 3.6 percent, BVH lost 5.4 percent and MSN dropped 1.3 percent at the end of the day. Meanwhile, both BID and NT2 were up 6.8 percent.
Both bourses traded more than 115 million shares with total trading value of 1.73 trillion VND (75 million USD), a slight decrease of 1.1 percent from the previous session.-VNA
