More foreign selling threatens local shares

Monday, Nov 21, 2016 08:32

Investors watch shares move on the trading platform of Artex Securities Company. Foreign selling could send local stocks down this week. — VNA/VNS Photo Thanh Nga

Foreign traders have increased selling in local securities markets and could threaten the future outlook, which has remained at 665-675 points since the beginning of the month.

The benchmark VN-Index on the HCM Stock Exchange was down 0.9 per cent last week, ending Friday at 673.3 points. It had gained 1.9 per cent in the previous session.

On the Ha Noi Stock Exchange, the HNX-Index saw a second weekly loss, decreasing 0.7 per cent for the week at 80.6 points. It had given up 1.5 per cent in the first half month.

Foreign investors concluded last week’s trading as net sellers on both exchanges, offloading total net value of nearly VND600 billion (US$26.8 million), a two-fold increase over their net buy value over the past month.

Their sales focused on large-cap stocks, including dairy firm Vinamilk (VNM), real estate developer VinGroup (VIC), steelmaker Hoa Phat Group (HPG), Masan Group (MSN), insurer Bao Viet Holding (BVH) and Sai Gon Securities Inc (SSI).

Eight of the top ten selling stocks were among the top 30 largest shares by market capitalistaion on the HCM Stock Exchange.

“This is a short-term risk that investors need to take into account,” Tran Hai Yen, a stock analyst at Bao Viet Securities Company, wrote in a note.

For the possibility that the US Federal Reserve (Fed) could hike interest rates soon, which the Fed’s chairwoman, Janet Yellen, has suggested, could trigger stronger net selling by foreign investors.

“The interest rate increase will have certain influences, which may lead to the withdrawal or net selling of foreign funds in the Vietnamese stock market,” Yen said.

The possibility that ‘rate hikes are on the horizon’ is having impacts on prices of the US dollar, gold and energy products.

The greenback is strengthening against other currencies, while gold prices have fallen to the lowest levels in the past five months.

Oil saw its first weekly gain since mid-October, following the prospect that the Organisation of Petroleum Exporting Countries (OPEC) would soon agree on a common production cut to support global oil prices.

Also, West Texas Intermediate (WTI) crude oil increased 0.6 per cent on Friday to $45.69 per barrel, while Brent crude was up 0.8 per cent to $46.86 per barrel.

In the local market, most large-cap stocks, even energy shares, saw negative movements, but shares of commodities, such as steel, rubber and mineral, have risen thanks to strong price rises on the global markets.

Mineral producers KSH Investment & Development (KSH) and Binh Thuan Mineral Industry (KSA), and steelmakers such as Hoa Phat Group (HPG) and Tien Len Steel (TLH), were among the biggest gainers last week.

According to many brokerage firms, the market is moving in a narrow band of around 665-675 points, which has lasted since the beginning of November. Investors are seeking to hold their current stock exposure, while awaiting clearer signals. – VNS

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