Blue chips drag down VN-Index

An investor watches stock movement at Bao Viet Securities Co.—VNS Photo Viet Thanh

HA NOI —A substantial decline by blue chips weighed on the HCM City Stock Market last week, pushing the VN-Index to a close last Friday of 414.74 points, a loss of over 3.6 per cent from the previous week's close. The value of trades improved slightly, however, averaging VND478.4 billion (US$23.2 million) per session on an average daily volume of 27.5 million shares.

VS-Large Cap, an index developed by the financial website vietstock.vn to track large cap shares, fell by over 4 per cent from a week earlier, led by steep declines in the value of such shares as Masan Group (MSN), insurer Bao Viet Holdings (BVH), Vinamilk (VNM), and real estate developers Hoang Anh Gia Lai (HAG) and Vincom (VIC).

On the Ha Noi Stock Exchange, the HNX-Index lost 1.79 per cent over the course of the week to close on Friday at 71.54 points. Trades remained sluggish throughout the week, with an average daily value of just VND207.3 billion ($10 million), with an average of 19 million shares changing hands per day.

Fiercely rising gold prices were distracting investors from the securities market, vietstock analysts wrote in a note. Domestic gold continued to hit new highs last week, reaching over VND39 million (1,892) per tael last Thursday. (A tael is equal to 1.2 ouces.)

The debt crisis in Europe, US negotiations over whether to raise the public debt ceiling, and rising inflation throughout the developing world would keep gold prices elevated for a period of time, with volatility in this investment channel likely to distract investors from securities markets for the short term.

With no positive news and a renewed indication that inflation may also be reheating, investors also preferred holding onto cash rather than risk it on the stock market, Vietstock analysts wrote. Inflation would remain the focus of this week's trading, they predicted.

An Phat Securities Co general director Tran Thien Ha also said many investment funds had recently raised the proporion of their cash holdings from 5 per cent up to 18 per cent, while attractive deposit interest rates have drawn a significant amount of money into commercial banks.

"People have said a lot about the lack of cash flow, but the bigger issue is the lack of investor confidence," Ha said.

A bear market has persisted for the first half this year, causing difficulties for securities companies and asset management companies. Over half of all brokerage houses and funds had seen losses by the end of the second quarter, according to the Ministry of Finance.

A number of companies have not yet reported their earnings for the period, and market insiders say this late reporting could signal even more sombre results to come.

Foreign investors concluded last week as net sellers on the both exchanges, unloading a net of VND8.3 billion ($403,000) worth of shares. Software producer FPT was the most heavily-traded share by foreign investors last week, with a net buy of VND33 billion ($1.6 milion), while foreign investors fled from Sacombank (STB), unloading VND13 billion ($631,000) worth of shares. — VNS