Local markets are set to feature lots of foreign trading again this week, with foreign investors’ taste likely to change market sentiment after foreign selling pressure had weighed down the stock market for the last two months.

The benchmark VN Index on the HCM Stock Exchange inched up 0.08 per cent to close Friday at 1,016.51 points, a weekly decline of 2.16 per cent.

The HNX Index on the Ha Noi Stock Exchange gained 0.86 per cent to end last week trading at 115.90 points. It fell a total 3.3 per cent week on week.

Last week’s decline was mostly caused by investors’ caution as they anticipated a rate hike decision from the US’s Federal Reserve and quarterly portfolio reviews of exchange-traded funds (ETFs) in Viet Nam.

On early Thursday, the Fed raised its interest rates to a range of between 1.5 per cent and 2 per cent and promised to make two more rate increases in 2018. The decision resulted in a worldwide withdrawal of foreign capital from emerging and frontier markets.

Investor sentiment was also on edge during the final week in which the two ETFs – FTSE Vietnam ETF and VNM ETF – reviewed their investment portfolios for the coming quarter.

As investor confidence was down, average trading liquidity last week also fell comparatively to the previous week.

More than 207.4 million shares were traded in each session of last week, worth nearly VND6 trillion (US$265.5 million). The figures were down 7.1 per cent in volume and 3.6 per cent in value from the previous week.

These factors resulted in a net foreign sell value of nearly VND1.74 trillion on the two local exchanges, focusing on property developers and other large-cap stocks.

Real estate business Vingroup (VIC) topped the must-sell list with some VND1.06 trillion worth of stocks net-sold by foreign investors. VIC was followed by steel producer Hoa Phat (HPG) and another property developer in Dat Xanh Group JSC (DXG).

Since the VN Index hit a historic high of 1,204.33 points on April 9, foreign investors have posted VND23 trillion worth of net purchases in local stocks, including VND28.55 trillion worth of put-through transactions for high-end property firm Vinhomes (VHM) shares when it debuted on the HCM Stock Exchange on May 17.

If the value of VHM share transactions was excluded from foreign trading, foreign investors were net sellers with total net sell value of VND5.46 trillion.

According to Ngo Quoc Hung, an analyst at MB Securities Company (MBS), foreign trading would still be a major concern for the whole market.

The stock market was still in a correction stage and low liquidity in recent sessions may be due to investors who were quiet when ETFs review their portfolios, Hung told tinnhanhchungkhoan.vn.

Net foreign selling last week was a certainty as ETFs sold more than buying in this review period, but it has been questioned if the two ETFs made up the whole net foreign selling last week or if the transactions were carried out by both ETFs and other investment funds, he said.

It would become clear if ETFs created the net sell last week or not if they stop selling this week, and investors should be cautious, Hung added.

Le Duc Khanh, director of market strategy department at PetroVietnam Securities Inc (PSI), said investors should not worry over foreign selling as it only had short-term impacts on the market.

Instead of worrying about foreign selling, investors should look for opportunities in firms that are forecast to report better-than-expected earnings for the second quarter and the first half of the year, Hung said.

Those firms may be property developers, led by Dat Xanh Group JSC (DXG), aviation service provider Taseco Air Service JSC (AST), Duc Giang Chemical and Detergent Powder JSC (DGC) and other firms such as PetroVietnam Power Nhon Trach 2 JSC (NT2) and the Refrigeration Electrical Engineering Corporation (REE). — VNS