Indices tumble on low pre-Tet volumes

Benchmark indices retreated on both of the nation’s stock exchanges on Friday, concluding January on diminished volume as well as lower values.

The nation’s stock markets enter a 10-day holiday beginning today, with trading to resume February 10.

On the HCM City Stock Exchange on Friday, the VN-Index clsoed at 510.60 points, a decline of over 1.7 per cent from the previous week. Overall volume and value dropped by over 22 per cent to a daily average of 32.4 million shares, worth VND850.3 billion (US$43.6 million).

Inflation was reported at 1.74 per cent in January, consistent with analyst predictions for price increases in the heavy shopping season ahead of the Tet (Lunar New Year) holiday.

Many listed companies also announced their 2010 business results last week, and a number of firms with high profits also saw their shares rise in value, including Vietinbank (CTG), Vietcombank (VCB), Vinamilk (VNM) and property developers Hoang Anh Gia Lai Co (HAG) and Vincom (VIC).

But heavy profit-taking after eight consecutive days of increased share values took its toll last week, particularly in the first three sessions of the week. Foreign investors helped counter the influence of profit-takers in the final two sessions, with net buys over the course of the week of nearly 15 million shares, worth almost VND507 billion ($26 million), and accounting for 64 per cent of the total market value on Thursday and Friday.

VCB and HAG were the most-favoured shares for foreign investors. Vietcombank reported a net profit of over VND4.1 trillion ($210.3 million) in 2010, an increase of over 21 per cent over 2009. Meanwhile, Standard & Poor’s on Thursday gave HAG a long-term corporate credit rating of B, with a positive outlook. The company also plans to issue bonds overseas this year, which would make it the second Vietnamese firm to list bonds overseas, following Vincom.

The volatility of a handful of blue chips strongly affected the movements of the VN-Index this month, with many analysts blaming Exchange-Traded Funds (ETFs). ETFs are investment funds that track an index, and the basket of assets that are used to compute the index.

In January, foreign investors on the HCM City market bought a net of over VND1.42 trillion ($73.1 million) worth of shares, with a strong focus on blue chips that have a strong influence on the VN-Index: HAG, VCB, insurer Bao Viet Holdings (BVH) and conglomerate Masan Group (MSN).

There were no formal figures on the number of ETFs investing in Viet Nam, but activities of two funds – London-listed Market Vector ETF and New York-listed FTSE Viet Nam Index – were strongly affecting the Vietnamese stock market, said Sai Gon-Ha Noi Securities Co analyst Doan Thi Anh Nguyet. The two funds together controlled assets totalling $600 million, she noted, adding that it was not uncommon for ETFs based on emerging markets to attract foreign investor attention due to the opportunities to make quick profits.

On the Ha Noi Stock Exchange, the HNX-Index closed on Friday at 106.63 points, a decline of just 1.15 per cent from the previous week’s close but nearly 6.67 per cent lower than the previous month’s close.

The value of trades on the Ha Noi market last week declined by nearly 22 per cent to around VND389 billion ($20 million) per session, with an average daily volume of just 21.5 million shares.

FPT Securities analyst Nguyen Ngoc Tuan said a majority of investors reduced trading shortly before Tet and avoided using financial leverages to cut lending costs during this long holiday.

Tuan said the HNX-Index had declined substantially, suggesting that the possibility of capital flows returning to the northern market was high, particularly after the holidays, when the financial reports of a number of listed companies would be released. — VNS

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