Shares plunge on investor pessimism

The steep declines on the two stock exchanges last week reflected investors' fears that the market is likely to fall in a downward spiral.

However, in contrast with local investors' moves, foreign investors unexpectedly finished the week as net buyers, following a long period of net selling.


On the HCM Stock Exchange, the Vn-Index lost a cumulative 5.86 per cent over the week to close last Friday at 565.33 points, while the HNX-Index on the Ha Noi exchange fell by a more substantial 7.9 per cent to end the week at 80.58 points.

Heavy profit-taking on blue chips drove the market down, and large-cap shares, including Bao Viet Holdings (BVH), Masan Group (MSN), PV Gas (GAS), Vinamilk (VNM), VinGroup (VIC) and Phu My Fertiliser, saw strong selling prices.

Therefore, the VN30, tracking the top 30 shares by market value and liquidity on the HCM City bourse, was also down 6.7 per cent to close at 621.13 points last Friday.

Meanwhile, cheaper prices attracted bargain trades. The daily trading volume on the HCM City exchanges rose 3 per cent to nearly 129 million shares, worth VND2.34 trillion (US$110.9 million).

However, trading decreased on the Ha Noi market as just 73 million shares, worth over VND809 billion ($38.3 million), were exchanged per session, down 15 per cent in volume from the previous week's average.

Also, the postponing of the first trial of former bank tycoon Nguyen Duc Kien last week made investors nervous. Investors feared that the market, which were already under a downward pressure, will be more vulnerable to negative information.

According to Le Bich Hang, analyst of FPT Securities Co, liquidity on the two markets remained low, while short-time investment is risky.

"The market will likely continue to plummet, with the VN-Index retreating to 550-555 points, while the HNX-Index would fall back 76-78 points," Hang said, suggesting newly-participated investors pick up shares which decreased more steeply than the market's pace.

"Long-term investors also should take advantage of the market's declines to buy potential shares which have good fundamentals and can benefit from Viet Nam's participation in the Trans- Pacific Pact (TPP), as well as the prospect of loosening room for foreign investments," Hang wrote in a note.

Foreign investors finished the week as net buyers on both exchanges, picking up shares worth a combined VND204 billion ($9.7 million). Their buys focused on blue chips, such as GAS, Vietcombank (VCB), Hoa Phat Group (HPG) on the HCM City market and Vinaconex (VCG) and PetroVietnam Technical Services Corp (PVS) on the Ha Noi exchange.