Stocks rise in short trading week

Indices closed up on both national stock exchanges while trading values and volumes improved.

Worries about the US economy continue to drag on markets worldwide, with US President Barack Obama scheduled to announce a new jobs package this week even as US consumer confidence fell in August to 44.5, its lowest level since April 2009.

Compared to the US, however, the EU is facing a much gloomier scenario due to the debt crisis. The European Central Bank has made efforts to calm markets, but recent auctions of Government bonds by Italy and Portugal were disappointing.

Domestically, the State Bank of Viet Nam issued some significant new policies last week, increasing the foreign currency reserve ratio for commercial banks but also moving to allow them to lend up to 80 per cent of funds held on deposit, a move expected to help stimulate sluggish credit growth.

The Ministry of Investment and Planning’s Foreign Investment Agency also published encouraging data last week, announcing that disbursements of foreign direct investment this year reached US$7.3 billion as of August 20, up 1 per cent over the same period last year. Disbursements of $1 billion in August alone exeeded the current monthly average of about $900 million per month.

The effect of the State Securities Commission’s recently introduced margin trading regulations were also a supportive factor for the market last week, with margin trading expected to help encourage the investment of an additional VND67.5 trillion ($3.2 billion) in the securities market.

“The actual number will probably be lower,” commented analysts with the financial information website vietstock.vn, but they agreed that it would improve cash flows into the stock market.

“The most difficult period for the economy has passed, but high inflation and high interest rates for a prolonged period have affected the health of the economy and of businesses,” said Maritime Bank Securities Co analyst Tran Quoc Hoan. “It’s going to take time for the market to fully recover.”

A meeting of the National Financial Supervisory Committee forecast inflation this year would reach 18 per cent while growth would slow to 5.5-6 per cent. To keep the lid on inflation in the closing months of the year, credit growth would be capped at a monthly rate of 1.8-2 per cent.

On the HCM City Stock Exchange last week, the VN-Index rose 7.6 per cent to 435.29 points, while the HNX-Index climbed by an even more impressive 8.8 per cent to close on Thursday at 75.36 points.

Although there were only four trading sessions during the week, which was shortened by Friday’s National Day holiday, the average value of trades on the HCM City Stock Exchange jumped by 51.6 per cent from the previous week to VND736.1 billion ($35.7 million), with an average volume of 45.9 million shares.

The average daily value in Ha Noi also soared by over 57.1 per cent to VND674.8 billion ($32.8 million), while daily volume rose by 56.7 per cent to an average of around 60 million shares.

Mid-cap shares witnessed the strongest increase during the week.

This group jumped well over 9 per cent, followed by large-cap shares, up 8.1 per cent. The top sectors included securities companies, up 15.1 per cent; real estate companies, up 11.6 per cent; and construction firms, up 10.9 per cent.

Foreign investors bucked the rising trend, however, selling a net of nearly VND75 billion ($3.7 million) worth of shares on both bourses, VND66 billion of which were sold on the southern exchange.

The market would likely go up this week, but investors should be tracking the movements of speculative cash to minimise risks, said analysts for the financial information website vietstock.vn.

“Profit-taking may occur if the HNX-Index reaches 79-80 points, while the VN-Index will fluctuate between 411-461 points,” added FPT Securities Co analyst Nguyen Van Quy. — VNS

Tags: vietnam stock, Vietnam stock market, VNindex