Index down for third week on slumping volume

LookAtVietnam – The VN-Index last week experienced its third straight week of declines, as trading volumes slumped on the HCM City Stock Exchange.

On the Ha Noi Stock Exchange last week, the HNX-Index closed at 145.76 after losing 9.98 points on the week, or 6.41 per cent.

Major newcomers Vietcombank (VCB) and Bao Viet Holdings (BVH) failed to put brakes on the downward trend, as the Index lost 25.93 points overall to end last week at 435.44, a fall of 5.62 per cent over the previous Friday’s close.

“The listing of Vietcombank was not motivation enough to create momentum for a market increase, at a time when capital inflows are clearly being diverted from the market, causing volumes to slump on both bourses,” said Nguyen Binh Duong from the FPT Securities brokerage department.

As the season for earnings reports begins this week, investor expectations of solid first-half corporate earnings, combined with overall net purchases maintained last week by foreign investors, facilitated the slight rallies of the HCM City market during two final days of the week, said Duong.

Foreign investment

Foreign investors ended last week on the HCM City market as net buyers of 12.4 million shares, with a net value of VND565.5 billion (US$31.8 million).

In Ha Noi, foreigners traded 13.5 million shares, worth a combined VND559 billion ($31.4 million).

Overall trading volumes on the southern bourse averaged 34.5 million shares per day, down 18 per cent from the previous week’s average. Average daily values reached VND1.2 trillion ($67.4 million), 19 per cent below the previous week’s average.

Stocks dropped in all sectors across the board, according to FPT Securities Co. Financial services shares plunged the sharpest, falling 13.31 percent, followed by insurance shares, down 12.3 per cent, and oil and gas shares, down 10.16 per cent.

Declines on world stock markets, along with the upcoming listing of a variety of major firms - particularly Vietinbank - would make investors continue to hesitate in their investment decisions, said Duong, predicting the VN-Index to range between 410 and 450 points in the coming week.

But the head of the HCM City Securities Co research department, Fiachra Mac Cana, told Dau tu chung khoan (Securities Investment) that the domestic market was now at the beginning point of a long-term circle of increases.

Mac Cana said the market was well supported by “a strong basic foundation”, adding that HCM City Securities research on the 30 top listed companies - which represented a combined 68 per cent of total market capitalisation of the domestic stock exchange - showed that business revenues have improved in recent months, backed by the Government’s subsidised-interest loan programme and easing pressures from costs.

But Mac Cana warned that the profitability of firms was still hindered by weak demand and predicted the VN-Index to reach 550-600 by the end of the year.

On the Ha Noi Stock Exchange last week, the HNX-Index closed at 145.76 after losing 9.98 points on the week, or 6.41 per cent. Daily trading values averaged about VND577.3 billion ($32.4 million) on an average volume of 17.4 million shares, both down 15 per cent from the previous week’s averages.

The unlisted public company market (UPCoM) gave the market a small bright spot on Friday, as the UPCoM-Index stopped its seven-day losing streak and picked up over 5 per cent to close at 74.46. Gains in shares of securities firms - including Tan Viet Securities (HIG), Viet Dragon Securities (VDS) and SME Securities (SME) - drove the upward move.

Since its opening on June 24, UPCoM has witnessed an average daily volume of 303,000 shares and an average daily value of VND4 billion ($224,700).

APEC Securities Co vice chairman Nguyen Manh Hao said UPCoM remained unattractive mainly due to the way orders were matched: in order for a transaction to be carried out successfully, buyer and seller needed to offer shares at the same volume and price level - which has proven highly inflexible.

But Ha Noi Stock Exchange deputy director Nguyen Thi Hoang Lan called the fledging market’s performance “an encouraging beginning,” adding the exchange had plans that would allow UPCoM to apply a continuous order matching method similar to that applied on the regular exchange.

The change was expected later this year, she said, “when the UPCoM has stabilised.”

A dozen more companies will be listed on UPCoM this month, according to exchange representatives.

VietNamNet/Viet Nam News