Viet Capital Securities Company (VCSC) said another at-the-close (ATC) session drop proved that investors had good reason to be scared of exchange traded fund (ETF) activity in the next couple of weeks. Shares of BVH, DPM, HAG and STB were dumped in the ATC session, a trading pattern now strongly associated with the FTSE Vietnam Index ETF.
The sell-off of FTSE-held stocks was expected due to the recent rebalancing but news that the ETF also saw 500,000 shares redeemed overnight gave investors one more reason to stay cautious, it said.
“We estimate that the redemption is equivalent to around VND271 billion and today, we note that foreign net outflows were roughly VND195 billion, which means that it will take at least one to two more sessions for the FTSE to finish selling out stocks to cover the redemptions,” VCSC added.
The VN-Index hit an intraday high of 525 points before settling at 518.24, down 3.71 points, or 0.71%, from the previous session. Turnover of the southern bourse tumbled 26.7% to around VND1.1 trillion
The Hanoi market also fell for a second straight day while turnover increased to VND360 billion. The HNX-Index lost 0.26% and ended the day at 65.32.
Vietcombank Securities Company noted demand displayed no significant improvement, implying a hesitation of the buyers to blue-chips which hit their highs after quite a long period of rapid growth.
In addition, foreign investors continued to net sell shares, exclusive of put-through transactions, which, to some extent, negatively influenced the demand and partly restrained the buying interest of domestic investors.
“We, therefore, retain our recommendation that investors whose portfolio has a reasonable weight of tickers with sound fundamentals and good liquidity should hold their position and closely watch coming market movements,” it said.
Meanwhile, HCMC Securities Corp. (HSC) said the State Securities Commission is proposing an extension of afternoon trading on the Hochiminh Stock Exchange (HOSE) while HOSE on Wednesday wrote to its member securities companies over a plan to extend market trading hours to 3:00 p.m. from the current 2:15 p.m.
The timetable for implementation is still under consideration and HOSE will open the system for testing from July 1-5.
HSC said that securities companies have been instructed to adjust their own systems from June 10-28 to facilitate such a change. If the test is successful, the broker expects, the change will apply in the middle of July or by the third quarter.