Volatility in the foreign exchange and inflation rates last week began to worry foreign investors, the final sustaining force on the nation's stock markets in recent days.
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Net buys by foreign investors fell to an eight-week low on the HCM City Stock Exchange, totalling just VND194.6 billion (US$10 million) worth of shares, as Ha Noi's inflation rate soared during October and the US dollar began to fetch over VND20,000 on the black market.
As a consequence, the VN-Index dropped by nearly 2.9 per cent during the past week to close on Friday at 451.21 points.
Foreign investors were seen to put money into blue-chip shares only in the final minutes of each day's trading session, accounting for over 81 per cent of volume in insurer Bao Viet Holdings (BVH), 66 per cent of PetroVietnam Finance (PVF), and nearly 57 per cent of real estate developer Kinh Bac Corp (KBC).
"This last-minute buys helped stock markets maintain some level of activity," FPT Securities Co analyst Le Thi Bich Hang said, noting that the average daily trading volume on the HCM City market rose 24.5 per cent over the previous week's averages to 30.5 million shares. The average daily value of trades remained meagre, however, at VND717.5 billion ($36.8 million).
Hang said that it was difficult to predict how long this last-minute price support from foreign investors would last and predicted that the VN-Index could range broadly in the coming week between 435 and 462.
On the Ha Noi Stock Exchange, without support from foreign investors, the HNX-Index plunged by nearly 7 per cent on the week to end Friday's session at just 111.32 points.
The average daily value of trades perked up by 19.8 per cent over the previous week's dismal totals to VND505 billion ($25.9 million), on an average daily volume of 25.3 million shares.
Nguyen Hong Hai, former deputy director of Ocean Bank, said even risk-averse investors who only bought blue chips did not want to put money into the stock market currently, as transactions carried high risk with the promise of only a small profit – sometimes lower than bank deposit interest rates.
Furthermore, Hai added, the earnings of many listed enterprises have failed to show significant improvement since the end of the 2008 financial crisis, further encouraging investors to shift capital from the stock market to other, more profitable areas.
Ngo Quoc Cuong, a veteran HCM City investor, revealed that he had profited substantially by taking advantage of volatility in gold prices.
"Trading in US dollars is also lucrative now, and demand for the currency will continue growing over the next few months," Cuong said.
Nguyen Hoai Nam of Sacombank Securities Co expected the stock market to continue only drawing the interest of long-term foreign investors.
