Foreign sellers make locals more cautious

Foreign sellers make locals more cautious

Foreign investors concluded last week's trading as net sellers on the HCM City Stock Exchange, impacting on the VN-Index and making the domestic investors more cautious.

The VN-Index lost a cumulative 1.65 per cent over the course of the week, finishing Friday's session at 494.27 points.

Foreigners unloaded a combined VND138 billion (US$6.6 million) during the course of last week. Their sales focused on large caps such as property developer Hoang Anh Gia Lai (HAG) with a net sale of VND48.5 billion ($2.3 million) and Vietcombank (VCB) with a net sale of VND30 billion ($1.4 million).

Lacking the support of foreign buys, many blue chips fell hard, which was shown in a 2.18 per cent decrease of the VN30 (tracking the top 30 shares by market capitalisation and liquidity) to stand at 557.77 points.

In early sessions of the week, the market advanced thanks to strong rises of heavyweight shares such as PetroVietnam Gas (GAS) and dairy producer Vinamilk (VNM), which investors believed would continue to grow further thanks to positive business results in the first quarter.

However, sell-offs in blue chips, initiated by exchange-traded funds (ETFs) on Wednesday, became stronger towards the end of the week and spread to other stocks on the exchange, pulling down the market.

Analysts of vietstock.vn, net sells of foreign investors could stem from arbitrages of ETFs when the price of fund certificates are lower than their net asset values.

The trading volume on the southern bourse improved slightly over the previous week, averaging 57.5 million shares, worth more than VND1.1 trillion ($52.4 million) per session.

On the Ha Noi Stock Exchange, the HNX-Index also lost 1.26 per cent during the week, closing Friday's session at 60.23 points. The daily trading volume decreased 2.5 per cent from the previous week, reaching over 44 million shares, worth nearly VND338.3 billion ($16.1 million).

Foreign investors were net buyers on the northern bourse last week but with a modest value. They picked up shares worth a combined VND18.4 billion ($876,200).

In the context of high risk, cash flows are shifting from speculative stocks to fundamental stocks, many of which are market pillars, said analysts of Viet Dragon Securities Co.

They said cash flow would be differentiated based on the business results of listed companies in the first quarter. Companies with good fundamentals and business prospect such as GAS, VNM and food processor Masan Group (MSN) would likely dominate the market.

"These influential stocks will likely continue to be preferred in the short term and will support the VN-Index," they wrote.

"Besides, the possibility of the Government approving the establishment of the national asset management company by the end of this month will help identify the market trend," they said.

According to data of the newspaper Dau tu chung khoan (Securities Investment), about 35-55 per cent of money was being poured into the top 30 shares on the HCM City exchange while this number was up to 80 per cent on the Ha Noi bourse.

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