Vietnamese shares could quickly recover, as the first two trading sessions might determine the movement of the benchmark VN Index this week, Viet Capital Securities Corporation wrote in its just-released report.
In the recovery, the banking sector would play a main role, even though it had rough trading sessions last week, the company said.
There is some market information, including the change in global oil prices and the report of the consumer price index, that are expected to have a strong influence on the securities market.
Therefore, investors should observe the market's directions and not sell in the first two sessions, the company advised.
Vietnamese shares last week dropped sharply on further depreciation of the dong against the US dollar, the consistent decrease of global oil prices and information about the banking sector.
The benchmark VN Index on the HCM Stock Exchange lost 5.56 per cent to close the week at 556.30 points, while the HNX Index on the Ha Noi Stock Exchange ended at 77.60 points – a decrease of 4.06 per cent compared to the previous week.
Among 23 sectors on the market, the energy sector with gas companies had the strongest decline, of 14.01 per cent, as they suffered from decreasing global oil prices.
Last week, US crude oil fell by 3.65 per cent to close at $40.34 per barrel, while Brent oil finished at $45.42 per cent per barrel – a decline of 6.8 per cent.
Both global benchmarks were down about one-fifth over the last month and would likely continue decreasing as the Organisation of the Petroleum Exporting Countries (OPEC) maintains its current output levels in order to keep global market shares competing with other exporters, such as the US and Russia.
Meanwhile, Vietnamese gas firms suffered heavy losses in their share values, especially the larger players. Petrovietnam Gas Corp (GAS), Petrovietnam Drilling & Well Service Corp (PVD) and Petrovietnam Coating JSC (PVB) lost 17.5, 16 and 15.5 per cent, respectively.
Further, the banking sector was down 5.94 per cent, compared to the previous week, as negative information about Eximbank and DongA Bank had negative effects on this sector.
The three largest banks – Vietcombank (VCB), the Bank for Investment and Development of Vietnam (BID) and VietinBank (CTG) – lost 2.3, 2.9 and 8.7 per cent.
VCB – as the largest share on the market with current capitalisation of VND113 trillion ($5 billion) – suffered most among banks in the last month and a half. VCB fell 22.2 per cent after peaking at VND54,500 in early July.
Investors also showed less confidence in the market as the Vietnamese central bank raised the exchange rate between the dong and the US dollar by an additional 1 per cent on Wednesday and broadened the trading band to +/-3 per cent, which resulted in a total increase of 5 per cent since the beginning of the year in order to compete with the decreasing Chinese yuan on the international finance market.
Shareholders, being threatened by the devaluation of the Vietnamese currency, caused a strong selloff during Friday's session, which sometimes pulled the market down more than 4 per cent and set up a new bottom for both indices in recent months.
However, strong purchases from market investors for bottom-priced shares helped the market reduce its losses and boosted market liquidity. At the end of the week, the VN Index closed down only 1.83 per cent, instead of more than 4 per cent during the day.
Further, market liquidity rocketed on Friday on both bourses, with more than 251 million shares in volume and nearly VND3.5 trillion ($156 million) in value – being equal to 27.2 per cent of last week's trading value.
Foreign investment was also hurt after the Ministry of Finance released Circular 123 on Wednesday, which failed to provide clear instructions to both domestic and foreign investors who might raise foreign capital for Vietnamese companies.
Also, foreign investors remained net sellers for the seventh day in a row since August 13, totaling a net sell value of VND807.5 billion ($36 million).