State Bank policy moves depress shares

November 30, 2009

LookAtVietnam – Restrengthened buys by domestic investors last Friday helped slow the market nosedive on Friday after five consecutive declining sessions . . .

Daily trading volume averaged 50.48 million shares, down by about 1 per cent from the previous week’s average, while daily trading value fell by a more significant 14.3 per cent to VND2.25 trillion (US$121.8 million).

Banking shares were the most heavily traded shares, with Sacombank (STB) responsible for 17.8 million trades and Eximbank (EIB) 15.3 million.

On the Ha Noi Stock Exchange, the HNX-Index closed at 155.41, down a whopping 15.9 per cent from the previous Friday.

The northern market saw a daily trading volume averaging 24.9 million shares, for a daily average turnover of VND912 billion ($49.3 million), a decrease of 11.2 per cent from the previous week’s average value.

Construction giant Vinaconex (VCG) and brokerage Kim Long Securities (KLS) were the most active shares on the Ha Noi market, with nearly 11.6 million and 9.7 million shares traded, respectively.

Friday’s modest rally, after nearly a week of declines, hinted at a recovery in investor psychology, commented Vincom Securities Co analysts in their weekly report on the market.

But the recent announcement of new interest rate, foreign exchange policies and tighter credit policies by the State Bank of Viet Nam were generally blamed for the steep market nosedive during the rest of last week.

Tran Duy Ngoc of FPT Securities Co also said, “The State Bank’s increase of the prime rate to 8 per cent effective December 1 has caused investors to respond negatively. In its earlier report, the State Bank had given a strong expression that it would not change the prime rate before the end of the year.”

But Khong Van Minh, investment director of the Jaccar Investment Fund, called the investor reaction rather extreme.

An increase in the prime rate after it had been held steady for nearly a year simply reflected the recovering economy, Minh said.

The State Bank’s policy adjustments were aimed at stabilising the economy and improving the liquidity of the banking system, he added.

The State Securities Commission also issued a decision last week to forbid share transactions within the T+4 period, the first four days after a share has been purchased but not yet completed clearance, which would level the playing field for small investors, said Nguyen Trong Nghia, chief of analysis and investment consultancy of Thang Long Securities Co.

But he also noted the possibility, as well, that they would legalise the use of shares as collateral for additional transactions as a move that would bring investors back into the market.

Speaking at a conference on Saturday, Nghia predicted the market would climb at the beginning of December and would range between 480 and 600 during the month, supported by sound economic data and positive year-end business results from listed companies.

Foreign investors continued to be steady net buyers last week, a positive sign that they expected a market recovery, said analysts of Viet Capital Securities Co. Foreign investors finished the week as net buyers of 12.8 million shares in HCM City, worth a total of VND592 billion ($32 million), and of over 2.1 million shares in Ha Noi, worth a combined VND89 billion ($4.8 million).

“We should consider the motivation of foreign investors in recent sessions,” said Le Tham Duong of the HCM City University of Banking. “They would not be foolish enough to pour money into securities if they were negatively assessing the Vietnamese stock market.”

When the shock over last week’s policy changes has faded, investor sentiment would stabilise, predicted Vietstock Finance Co. In addition, many shares prices were dropping to an attractive zone for mid-and long-term buys; it said. But it also worried that the Dubai financial crisis which was adversely influencing world stock markets could hinder the recovery of Viet Nam’s market.

VietNamNet/Viet Nam News

 

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