Hanoi (VNS/VNA) - The number of newly-opened securitiesaccounts dropped sharply in July to the lowest in about two years as stockmarket liquidity hit a monthly low.

Data from the Vietnam Securities Depository (VSD) showed domesticinvestors opened 199,128 new securities accounts last month, a decline of 57%over the previous month. 

This is the second time the number of new accounts opened in thecountry has dropped below 200,000 units. The last time was in February, whichcoincided with the Lunar New Year Holiday.

Retail investors continued to be the market’s keycontributor opening 198,988 new accounts, with 140 accounts frominstitutional investors. 

Meanwhile, in July, domestic individual investors closed 3,279accounts. In the first seven months of the year, domestic investors opened morethan two million new securities accounts, far exceeding the figure for2021 (1.53 million accounts).

Trading in the market was also gloomier in July. The averageliquidity of the three exchanges decreased by 24% compared to the previousmonth and dropped by 45.7% over the same period last year to 13.4 trillion VND(574.6 million USD). 

The matching value on the Ho Chi Minh Stock Exchange (HoSE) hasslipped to the threshold of 10 trillion VND per session, the lowest in abouttwo years.

The decline in market liquidity may be due to the gradualtightening of credit activities, especially for some high-risk sectors such assecurities.

Investors also radically reduced the proportion of margin loans toavoid the risk of being caught in a sell-off force in an unfavourablemarket. 

As of June 30, the margin balance in the whole market was estimatedto have decreased by about 42 trillion VND compared to the end of the firstquarter of about 140 trillion VND.

On the contrary, foreign investors were very active last monthwith 434 new accounts opened, a sharp increase from the previous month and thehighest number since last November.

However, foreign investors suddenly turned into net sellers with avalue of 1 trillion VND. Specifically, they net sold more than 400 billion VND onthe HoSE.

Previously, foreign investors had been net buyers continuously forthree months of the second quarter of 2022, with a total value of more than 10trillion VND.

Liquidity bottomed out in July, and net selling from foreigninvestors may have come from cautious sentiment ahead of the decision ofthe US Federal Reserve in the meeting at the end of July. 

The increase in interest rates by 0.75 percentage points waswidely expected. And with current economic reports from the US, there is apossibility of loosening the speed of monetary tightening, which has positivelysupported the market sentiment.

In the first three sessions of August, market liquidity hasimproved significantly compared to the previous period, with the matching valueon HoSE remaining above 15 trillion VND.

In addition, foreign investors' continuous net buying ofhundreds of billions VND per session also strengthenedinvestor confidence in the stock market./.