Stock markets sank around the world after the Fed signaled that it would wind down its bond-buying by next year. The local stock market, which historically has low correlation to global markets, held up fairly well as the VN-Index and HNX-Index both fell by only 0.7% compared to larger declines of 1-3% in markets in the U.S., Europe and Asia.
Viet Capital Securities Corp. (VCSC) said stocks fell early but were briefly supported by news that the National Assembly had approved the corporate tax reduction to 22% from 25%.
However, foreign selling pressure overwhelmed the recycled news in the afternoon session, presumably as the exchange traded funds (ETFs) FTSE and Van Eck rushed to wrap up their rebalancing by today.
While trading data showed a slowdown in foreign selling on Wednesday, foreign net outflows picked up to VND91 billion from VND75 billion on the southern bourse.
The VN-Index lost 3.86 points, or 0.77%, against the previous day to close at 499.51. Liquidity on the southern bourse remained low with 49.4 million shares worth VND812 billion traded.
In the VN30 basket, only three stocks closed the day with gains while 23 others reported losses, dragging the VN30 index down 1.72 points, or 0.31%, to 555.01.
The Hanoi market also retreated with turnover slipping to VND288 billion. The HNX-Index fell 0.49 point, or 0.75%, and ended the day at 64.53.
VCSC said that trading volume would be volatile due to ETFs rebalancing today and liquidity usually tumbled after a rebalancing period. Technical signs show the VN-Index and HNX-Index would drop to their nearest supporting lines of 485 points and 60.5-61 points respectively before entering a new rally phase.
According to Vietcombank Securities Company, foreign investors’ activity exerted insignificant impacts on the market on Thursday and their trading could be much more active in the remainder of the week.
Given the balance between demand and supply, investors with reasonable stock weighting portfolio should hold on to their position. Bottom fishing is not recommended for now since the market has yet to show clear signals about an upward trend. Investors are advised to eye trading of the foreign side and market movements in the coming sessions to make proper decisions, the broker added.