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Tight credit policy depresses shares

Update: February, 20/2012 - 10:04

 

An investor monitors transactions at the offices of Bao Viet Securities Co. — VNS Photo Viet Thanh
HA NOI — Substantial gains on Friday helped mitigate the stock market's overall downward trend last week, as well as give a boost to investor psychology heading into this week's trading.

On the HCM City Stock Exchange, the VN-Index closed out the week at 403.30 points, a decline from the previous week of just 0.43 per cent, while the VN30 Index slid 1.53 per cent to 451.22.

On the Ha Noi Stock Exchange, the HNX-Index also fell by 1.43 per cent from the previous week's close, concluding Friday's session at 61.79 points.

Gloom pervaded trading at the beginning of last week, following the announcement of State Bank of Viet Nam Directive No 01, which continued to cap lending to securities and real estate investors.

Many investors believe that the central bank has turned its back on the stock market, and analysts confirm that capital flows into the market in recent months have mainly come from investors' own sources. Therefore, they conclude, the new directive will not essentially change the situation already extent on the market.

Phan Dung Khanh, head of analysis for Kim Eng Securities Co, suggested to the newspaper Thoi bao Kinh te Sai Gon (Sai Gon Economic Times) that many investors had pulled capital from other investment channels (gold and foreign currencies) and put it into stock market in order to take advantage of depressed share prices.

"However, these aren't stable investment flows, and there is no economic information strong enough to support the stock market for the time being," Khanh said.

Resulting investor caution pushed total market volumes down strongly on both bourses last week. Volume on the HCM City market was down 22.6 per cent from the prior week, averaging nearly 38.5 million shares and a value of VND662.2 billion (US$31.5 million) per day.

The volume of trades on the Ha Noi market also plunged by over 21 per cent to a daily average of 34.7 million shares and an average daily value of VND288 billion ($13.7 million).

Bank shares were the biggest victim of Directive No 01. With shares like Eximbank (EIB), Sacombank (STB), Military Bank (MBB), Ha Noi Housing Bank (HBB) and Sai Gon-Ha Noi Bank (SHB) consistently among the most-active shares on both of the nation's stock exchanges last week, the index of financial group Vietstock which tracks banking stocks showed bank shares losing over 6.7 per cent of their value.

Setting aside the impact of Directive No 01, market insiders noted that bank shares had seen strong increases in recent weeks, making a wave of profit-taking inevitable.

Sacombank (STB) was the heaviest loser, with a loss of 16 per cent, as rumours circulated around its upcoming shareholders meeting.

Foreign investors were again net buyers on both markets last week, picking up a combined net of VND243 billion ($11.6 million) worth of shares. However, Sai Gon Securities Inc deputy director Nguyen Hong Nam suggested that the net buys by foreign investors were simply a reflection of normal activity by investment funds – including disbursements by established funds simply reacting to low stock prices and the upcoming dividend season.

The coming week might bring news that some major banks had begun reducing their lending interest rates, as well as news of a slight acceleration of inflation during February, Vietstock analysts wrote in a report. — VNS

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