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The VN-Index edged up just 0.2 percent to end Tuesday at 1,134.33 points, its slowest growth rate in the past five-session rally.
However, liquidity dropped to 722 million shares worth VND14.7 trillion (US$620 million), down 31 percent in volume and 28 percent in value compared to Monday’s levels, as well as the lowest since June 20.
Foreign traders were net sellers on the southern bourse for a third day in a row, responsible for a net sell value of VND468 billion.
Steel giant Hoa Phat Group (HPG) and Vingroup’s trio of stocks – Vincom Retail (VRE), Vinhomes (VHM), and Vingroup (VIC) – were the market’s main supporters. HPG increased 2.4 percent while VRE climbed 2.8 percent and VHM and VIC grew by less than 1 percent each.
Despite the overall net selling, foreign traders continued to show interest in Hoa Phat's shares. HPG topped their buying list with a net value of VND139.5 billion on Monday. Since the beginning of June, foreign investors have net bought VND1.2 trillion of shares in Vietnam's largest steelmaker, bringing the total for this year to VND4.2 trillion, making HPG the most sought-after share by foreign traders on the stock exchange.
Apart from the supply-demand dynamics, the relatively optimistic recovery prospects of the steel industry in general, and Hoa Phat in particular, may be attracting foreign investors. Not only industry leaders but also many analysts believe that the steel industry's most challenging period has passed.
According to the Vietnam Steel Association (VSA), steel production in May reached two million tons, a 3.1 percent increase compared to the previous month. Export volume experienced impressive growth of 29.7 percent month-on-month, reaching 822,657 tons, nearly 52 percent higher than the same period last year.
In May, Hoa Phat's sales of steel products (construction steel, hot rolled coil, and billet) reached 530,000 tons, a 20 percent decrease compared to the same period last year but a 16 percent increase from April. This marked the company's highest steel consumption since the beginning of the year.
According to Yuanta Securities Co, the market's uptrend is expected to continue as it enters the closing week of the net asset value of funds in the second quarter of 2023. The VN-Index may retest the resistance zone of 1,135 – 1,145 points in the next session.
However, analysts also highlighted the increasing short-term risks, indicating that it may be a challenging period to find high profits. The market's growth indicators are pointing towards the overbought zone, suggesting the possibility of corrections in the next trading sessions.
On the Hanoi Stock Exchange, in contrast, the HNX-Index declined for the third consecutive day, albeit with a minor decrease of 0.1 percent, closing at 230.82 points.
Liquidity also significantly declined, with only 76 million shares valued at VND1.4 trillion being traded. This represented a 38 percent decrease in volume and a 34 percent decline in value compared to Monday's levels.
