Investors have sought opportunities in defensive stocks amid rising fears about the US-China trade war, and brokerage firms expect the trend to continue this week.

 

The benchmark VN-Index on the Hồ Chí Minh Stock Exchange ended Friday at 970.03 points, for a total four-day decline of 1.73 per cent.

 

The index lost a total of 0.66 per cent last week.

 

Market sentiment was dragged down by fears about the escalation of the US-China trade war and the global economic slowdown.

 

Investors moved away from large-cap stocks and flocked to mid-cap and small-cap firms.

 

Weak purchasing power was the reason for lower trading liquidity.

 

An average of 124 million shares were traded through order-matching transactions in each session last week, down 6.4 per cent from the previous week.

 

In its report, BIDV Securities Corp (BSC) noted that the market was suffering from a shortage of capital inflow.

 

Including the May 21 purchase of nearly 51 million Vingroup shares worth VNĐ5.7 trillion, Foreign investors last week net-bought a total of VNĐ5.15 trillion (US$221.4 million)

 

If the huge purchase is excluded, foreign investors net-sold a total of VNĐ550.8 billion in the week.

 

This indicates investors’ worries about the potential harm that the US-China trade war may have to the global economy, triggering them to run away from risky assets and buy safe ones.

 

Investors are becoming more defensive in this time, according to Phan Dũng Khánh, head of the investment department at Maybank KimEng Securities Co.

 

Gold futures inched down 0.1 per cent to end Friday at $1,286.60 for an ounce, but still recorded a weekly gain of 0.6 per cent.

 

In Việt Nam, investors looked for opportunities in mid-cap and small-cap stocks, especially those with supportive information and seasonal growth.

 

Large-cap stocks were often affected by the trading of exchange-traded funds (ETFs) and foreign investors, so it was reasonable to switch to mid-cap and small-cap stocks in the near future, Phạm Đức Hoàng, head of the market analysis division at Agribank Securities Co, told tinnhanhchungkhoan.vn.

 

“Seeking the stocks (of the companies) that have had good Q1 earnings growth but not yet made strong gains is not a bad idea,” he said.

 

Brewery stocks advanced last week. Sabeco (SAB) rose 1.6 per cent, and Habeco (BHN) soared 12.7 per cent mostly because of increasing consumption of beer in the summer.

 

Technology stocks also had a good week with the growth of FPT Corp (2.6 per cent) and CMC Corp (11.8 per cent).

 

Strong gains of tech stocks were attributed to Việt Nam benefiting from the US-China trade war, which is expected to move technological production of global companies from China to other countries in the Asia Pacific region.

 

“The VN-Index is basically in the short-term consolidation stage and the market clearly has little growth motivation,” the BSC report said. “The re-allocation of capital may help the market settle down after last week’s declines amid lack of supportive information.”

 

However, last Friday's decline might be a bad signal for the stock market and it would likely keep declining this week, Hoàng said.

 

“The VN-Index may find its break-even point at 950-960 points next week but it will not go back into the uptrend immediately,” he said.

 

Generally speaking, the Vietnamese stock market was being pressurised by the uncertainty of global economic and political developments, Asean Securities Co said.

 

The stock market’s short-term direction was changing to “decline” and investors might want to strengthen their portfolios to improve risk management at the moment, the company said. – VNS