Vietnamese shares may remain volatile this week as investors receive less positive business news from listed companies, while declining oil prices could push energy stocks lower, securities firms forecast. — VNS Photo kinhdoanh.net

The benchmark VN Index on the HCM Stock Exchange fell 0.8 per cent on Friday to finish last week at 652.23 points, slightly higher than the previous week's ending of 649.87 points.

Meanwhile, the southern market index dropped 3.4 per cent from the eight-year high of 675.12 points reached on July 13.

Additionally, the HNX Index on the Ha Noi Stock Exchange finished 0.2 per cent at 83.71 points on Friday, slightly down from the previous week's closing of 84.07 points.

The northern market index has lost 4.2 per cent since July 13.

"Crude prices have declined during July and shown no signs of stopping at the moment, which may be a challenge for investors on Viet Nam's stock market, as it weighs on investor confidence in oil and gas-related firms, in the short-term," Bao Viet Securities Corp (BVSC) wrote in its Friday report.

London-traded Brent crude ended last week at US$43.53 per barrel, up 0.7 per cent from Thursday, and US crude West Texas Intermediate (WTI) rose 1.1 per cent to close at $41.60 a barrel.

Friday's gains were unable to cover the fact that oil prices have fallen sharply since June 29, with a drop of 16.6 per cent in US crude prices and 14 per cent in Brent crude prices, following a strong first half of the year.

Such large decreases in oil prices have put Vietnamese energy stocks in a downward trend over the past month.

Also, PetroVietnam Gas Corp (GAS) has lost 12.7 per cent in the last three weeks, PetroVietnam Drilling and Well Services Corp (PVD) and PetroVietnam Mud Drilling Corp (PVC) has plunged 18.7 per cent and 16.2 per cent since early July.

Investors' cautiousness will also be a problem for the development of the stock market, as the market has come to the month in which companies provide few updates about their business performances, and investors tend to be careful with new investments following the recent slowdown in the market.

Cautious investor sentiment caused a slump in market trading liquidity last week, compared to the average figures recorded in the previous three weeks, FPT Securities Corp said.

Last week, investors traded more than 154 million shares each session, worth VND2.62 trillion ($116.7 million), down one-quarter in trading volume and down nearly one-third in trading value from the previous three week's average trading figures.

Facing possible market volatility this week, investors can still find opportunities to increase assets in their investment portfolios, thus helping push the stock market forward.

First, the decline of oil prices in July is perhaps a chance for investors to make new investments.

"Oil prices are bottoming and could boom in August," said Duong Van Chung, head of the investment division at Military Bank Securities Corp (MBS).

"A possible August boom in crude prices could make energy stocks attractive to investors," Chung said.

Foreign investors' trading is also a factor that could lift local investor confidence, as the market has recorded a strong flow of foreign investments in local stocks.

Chung said that the recent net foreign buy value is a result of stable interest rates that have been applied by the US and Viet Nam's central banks, especially after Britain voted to leave the European Union in late June.

Foreign investors are expected to continue to purchase assets in the frontier and emerging markets in August, he added.

Additionally, Vietnamese share prices are now comparatively attractive to foreign investors, particularly in comparison to those in other markets in the region, said Le Nguyet Anh, head of market analysis at Asia Commercial Bank Securities Co (ACBS).

"Viet Nam is expected to remain attractive to foreign investors due to its stable interest and foreign exchange rates, as well as highly-expected GDP growth," she said. — VNS