Following the bullish session on Monday, local markets were fragile on Tuesday with both indices falling on weakening investor sentiment, as external factors increase volatility in the market.

The benchmark VN-Index on the HCM Stock Exchange fell 2.55 per cent to close the session at 962.16 points, still under the 1000-point threshold. The southern market index had dropped 2.87 per cent in the previous session.

On the Ha Noi Stock Exchange, the HNX-Index also edged down 2.18 per cent to end at 110.58 points. The northern market index had decreased by 2.46 per cent the previous day.

More than 312.6 million shares were traded on the two local exchanges, worth VND7.8 trillion (US$342 million).

The market breadth was negative as declining stocks outnumbered gaining ones by 393 to 132 while 263 other stocks remained unchanged.

Massive sell-offs drowned 18 of the 20 sectors on the stock market. Key industries that saw share prices drop included banking-financial, energy, construction material and retail, data on vietstock.vn showed.

Large-cap stocks were hit strongly by profit-taking pressure. The large-cap VN30 Index fell 2.60 per cent to 945.11 points with 27 of the 30 largest stocks by market capitalisation suffering.

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

The move has no signs of stop as foreign money continued to leave the market, becoming major concern for the whole market and partly affecting domestic investors’ confidence.

Foreign investors Tuesday net sold VND488.83 billion on the HOSE, focusing on property developer Vingroup (VND114 billion), steel producer Hoa Phat (VND102.2 billion) and Real Estate firm Dat Xanh Group JSC (VND67.2 billion). They also net sold VND18.43 billion on the HNX.

According to Bao Viet Securities Company (BVSC), US-China trade tensions escalate amid the retaliatory acts of the two nations over the past few days.

“These moves keep raising concerns about a trade war after several rounds of talks failed reach an agreement and the conflicts have kept escalating,” BVSC said in its daily report.

The downward trend among large-caps were widespread during the trading session, with many stocks hitting the daily limit decline of 7 per cent, including PetroVietnam Gas JSC (GAS), FLC Faros Construction Joint Stock Company (ROS), Hoa Binh Construction Group Joint Stock Company HBC and Dat Xanh Group JSC (DXG).

However, demand unexpectedly increased in the ATC session and helped slow the downward trend of the index.

According to Viet Dragon Securities Company (VDSC), the demand at the end of the session may signal a technical recovery in the next 1-2 sessions.

“However, after two sharp declining sessions, the market seems to back to the downtrend in the medium term. As such, the recovery will likely not last long, and should be seen as an opportunity for investors to reduce their stock exposure,” VDSC said in its daily report. — VNS