Shares are forecast to slow down this week in the face of rising profit-taking pressure after a long rally, net selling by foreign investors and uncertainty before the portfolio restructuring period of exchange-traded funds (ETFs).

Investors on Saigon Securities’ trading floor in Hanoi

The benchmark VN-Index ended nine straight weeks of gains with a loss of 2.1 percent in the first week of December, closing December 8 at 940.16 points.

Vietnam’s benchmark index had expanded nearly 14 percent in November.

After a brief rise on December 4, the market experienced three consecutive falling sessions as profit-taking selling increased, especially of large caps, which sent their prices down.

The biggest listed company Vinamilk (VNM) gave up 4 percent in value last week while brewer giant Sabeco (SAB) declined 6.4 percent. Two large real estate companies, FLC Faros Construction (ROS) and VinGroup (VIC), slid 14.2 percent and 2.1 percent.

Bank stocks that gained substantially in the past rallies were also caught in downtrend. Shares of the big four (four biggest banks by total assets and market value) – Vietcombank (VCB), Vietinbank (CTG), BIDV (BID) and Military Bank (MBB) – decreased by between two and four percent.

“We believe there is a strong selling pressure in the market. Besides, lower liquidity, which may come from the reduction of margin positions, indicates that investors are less exposed to risk than before,” Quang Vo, a senior analyst at Viet Dragon Securities, wrote in a weekend report.

Predicting the VN-Index could return to an uptrend, Quang Vo advised that investors protect their gains and reduce margin positions until the market shows clear recovery signals.

The HNX-Index on the Hanoi Stock Exchange also edged down 1.5 percent last week, closing December 8 at 113.81 points.

Liquidity weakened with an average of 277.4 million shares worth 5.8 trillion VND (254.4 million USD) being traded in the two markets per session, down 12 percent in volume and 20 percent in value compared to the previous week.

Foreign investors concluded as net sellers last week, offloading 2.8 million shares worth 942.7 billion VND on the two exchanges. Their net selling was a negative factor, given that they posted not purchases of 11.3 trillion VND (495.6 million USD) in November.

According to Nguyen Viet Duc, a market strategist with MB Securities Co, a number of funds and investors began to realise cash profits towards the end of the year and look for new investment opportunities. He said it was typical that the market gets dull before the ETFs’ portfolio restructuring.

“The market may level off in one to two weeks and is likely to continue to rise after ETFs finish reviewing their portfolios,” Duc said.

Nguyen Van Hanh, a senior broker at Sai Gon-Hanoi Securities Co, said downward correction was necessary during an uptrend to consolidate the new price base and reduce market risks.

Hanh said large-cap stocks may recover in early trading this week but general trading will likely slow down as investors will continue to realise profits and then wait to get a clearer sign of the next trend.

He predicted that the VN-Index will move in the 930-950 points range this week.-VNA