Hanoi (VNS/VNA) - Selling pressure ispredicted to extend to this week’s trading, which may have negative impacts onthe stock market, in the context of declining trade by foreign investors andunexpected movements in the US market.

The benchmark VN Index recorded the first weeklyloss since the beginning of 2018, down 0.95 percent in the week ending onFebruary 2 at 1,105.04 points on the HCM Stock Exchange.

The negative movements also occurred on the HanoiStock Exchange, with the HNX Index losing 2.25 percent to close February 2 at123.97 points.

Cash flows showed signs of weakness and werewithdrawn from the market. The average trading volume on the HCM Stock Exchangelast week declined by over 20 percent from the previous week, reaching 253.8million shares, valued at 8 trillion VND (351 million USD) per session.

Investors, however, were more active on the Hanoi’sbourse, which pushed up the daily trading volume by over 6 percent, averaging88.6 million shares, worth 1.5 trillion VND per session.

According to Tran Duc Anh, a senior analyst atBao Viet Securities JSC, the pressure of profit taking in the market hasincreased significantly, causing declines in both stock indices.

Average prices of shares on the stock markethave been pushed up to high levels after a prolonged rally, with strong growthof large-cap stocks, driven by their impressive business results in 2017 (suchas steel, banking, securities, oil and gas), while investors tend to sell tolock in profits, in the absence of new supporting information.

The VN Index rallied 12.8 percent in January,becoming one of the three fastest growing markets in the world in January. Whenevaluating the three-month period, Vietnam’s benchmark index has grown 32.62 percent,becoming the best performer in the world.

Most listed companies have announced theirbusiness results and the market will face an absence of information this week.

“With the upcoming Tet (Lunar New Year) holiday,investors using high financing leverage will sell out to avoid paying intereston margins,” Anh said, noting the State Securities Commission’s recentregulation to raise the margin ratio to 60 percent, also helped discourageinvestors to borrow more money to purchase stocks.

In addition, global stock markets witnessednegative movements in the past week due to concerns over the US FederalReserve’s possibility to accelerate ít interest hike scheme, after the USeconomy reported positive changes.

“Vietnam has clearer correlations with theglobal market, so I’m inclined towards the scenario that the market willcontinue its downward correction this week, with a moderate decrease,” Anh wasquoted as saying on tinnhanhchungkhoan.vn.

“However, the downward trend will not occuracross the market, but will have a wide divergence,” he said.

Large caps were under the heaviest profit-takingpressures last week, especially oil and gas stocks. Major energy companies,including Petrolimex, PetroVietnam Drilling Well Services (PVD) andPetroVietnam Technical Services (PVS), declined between 5-16 percent.

Shares of leading banks and finance companies,which had been market supporters, also weakened and saw a divergence whichfailed to lift the market.

“As the holiday is approaching, the market, inthe last sessions before Tet, may not be as active. However, there is no needfor investors to rush and buy at these prices,” according to Hieu Nguyen, ananalyst at Viet Dragon Securities Co.

Not only is domestic money withdrawing from themarket, but foreign investors are also showing signs of caution, reflecting indecreases in trading value on the HCM Stock Exchange.

Foreign investors continued to conclude as netbuyers on the southern bourse last week, their seventh net buying week, buttheir net buy value decreased nearly 98 percent compared to the previous week,to reach only 39.2 billion VND. (They were responsible for net buy values ofnearly 1.7 trillion VND from January 22-26.)

On Hanoi’s exchange, foreign traders were netsellers with a combined value of 98 billion VND last week.-VNA