A week of declining sessions and slow trading on the HCM City Stock Exchange last week was interrupted by only a single day of gains, with the VN-Index losing a cumulative 5.5 per cent from the previous week, to close last Friday at 477.59 points.
Daily trading values averaged only a modest VND1.45 trillion (US$77.1 million), a drop of 23.4 per cent from the previous week, on an average daily volume of 34 million shares.
On the Ha Noi Stock Exchange, the HNX-Index lost an even more substantial 8 percent of its value on the week, ending Friday at just 157.58 points. Average value on the northern bourse reached only VND670 billion ($35.6 million) per day, down 30.5 percent from the previous week, with an average daily volume of 20.6 million shares.
"Last week’s trades were swamped by the depressed and cautious attitude of investors, exacerbated by rumours circulating around the market," said FPT Securities Company analyst Nguyen Tuan.
Even favourable information released in the week has seen no positive market response, said Tuan, noting little improvement following announcements of reasonable inflation in January and the State Bank’s denial of rumours of a rise in the prime interest rate.
Viet Nam Association of Financial Investors (VAFI) General Secretary Nguyen Hoang Hai agreed that the market was being distorted by rumours, driving investors to sell off shares and cut losses in fear of an even worse market.
Hai noted some rumours were intentionally spread, aimed at inexperienced, smaller investors, while a portion of investors were always waiting to catch good shares at rock-bottom prices.
When the VN-Index fell below 480 last Thursday, many investors reacted hysterically, and sales were heavy until right before the closing bell, when about 9.3 million, worth VND433 billion ($23 million), were snapped up, accounting for 23.4 percent of the day’s total volume.
Foreign investors also soared their buys to almost 5 million shares, worth a combined VND229.4 billion ($12.2 million), the highest value from the New Year.
"To protect themselves from false rumours, investors should focus on economic development and be discreet and watchful for groundless gossip," Hai said.
Ten consecutive days of net buys by foreign investors were the most positive sign in the week’s trades. Foreign investors bought a net of 6.8 million shares on both bourses over the course of the week, worth a combined VND298 billion ($15.9 million).
"Though modest, foreign net buys cushioned the market fall and can be viewed as a positive indicator for a future rebound," said FPT Securities Company analyst Nguyen Tuan.
Analysts generally suggest that this week’s trades will be largely influenced by the State Bank’s release on the prime rate for February. The annoucement of the interest rate on $1 billion in Government bonds being sold on the international market will also be an important indicator, showing foreign investors’ outlook for Vietnamese economy.
"If there is no unfavourable information this week, the market will fluctuate within a narrower band," said Tuan, reckoning the VN-Index would range between 460 and 495.