Market volatility expected as selling pressure rises

Market volatility expected as selling pressure rises

Investors trace market fluctuations at the trading floor of Tân Việt Securities Joint Stock Company in Hà Nội. — VNS Photo Trương Vị

HÀ NỘI — A big drop on Friday has signalled Việt Nam’s benchmark VN-Index may continue falling this week as investors worry about global markets and earn some profits from local stocks.

The benchmark VN-Index on the HCM Stock Exchange dropped  一. 四 九 per cent to close Friday at  一,00 八. 三 九 points.

The southern market index had gained total  一 per cent in the previous three straight sessions but Friday’s decline has erased its entire growth last week.

The VN-Index ended last week 0. 八 六 per cent lower than the previous one.

The HNX Index on the Ha Noi Stock Exchange lost  一. 三 七 per cent to end at  一 一 四. 六 七 points, putting an end to its two-day increase of total  一. 一 per cent.

The northern market index dropped total  一. 三 八 per cent on a weekly basis.

An average of nearly  三0 八 million shares was traded in each session last week, worth VNĐ 九. 五 trillion (US$ 四 一 二. 四 million).

The sharp increase in trading liquidity was attributed to foreign purchases of consumer firm Masan shares on Tuesday and a sell-off on Friday.

Investors exchanged VNĐ 一 七. 三 trillion worth of stocks on Tuesday, including VNĐ 一 一 trillion worth of foreign purchases for Masan shares.

The figure was VNĐ 一 一. 六 trillion for Friday as a sell-off was triggered by the escalation of trade tensions between the US and China after some Chinese tech firms were reported to have installed spy chips in their products.

The Vietnamese stock market had gone through a big Friday decline as confidence in local stocks was depleting at the  一,0 二 五-point level, BIDV Securities JSC (BSC) said in its weekly report.

The local market was also affected by negative movements of global stocks, it added.

Hawkish co妹妹ents by US central bank Fed officials on more interest rate hikes boosted the US  一0-year bond yield to  三. 二 per cent – the highest since  二0 一 一.

Those two factors have dampened the confidence of foreign investors in local stocks and limit the possibility of the VN-Index overcoming its  一,0 二 五 point level.

Friday’s decline doesn’t mean the uptrend is over but selling pressure has risen, proving that investors are trying to take profits from the stocks that have already been priced for earnings prospects, BSC said.

Therefore, the  一,000-point level would be a big test for the VN-Index this week, BSC added.

Market analyst Nguyễn Hữu Bình told tinnhanhchungkhoan.vn that the stock market has moved with a strong mixture among local stocks in recent weeks.

Some stocks have gained  五0- 六0 per cent while some are staying at their low-price ranges, so those that have gained substantially will encounter strong selling pressure in the short term, he said.

Cash flow is still weak even when the market has entered its short-term uptrend, Bình said, adding that the earnings season is the only factor to count on at the moment.

“However, this third-quarter earnings season may not be impressive and the market will continue diverging. Those that have gained strongly would not extend growth while lower-than-expected earnings reports would drag their prices down significantly.” — VNS