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VietNamNews

Markets slow on inflation worries

Update: March, 19/2012 - 10:15
Investors at An Binh Securities in Ha Noi. — VNS Photo Viet Thanh
HA NOI — The VN-Index concluded Friday at 438.52 points, a gain of 1.48 per cent over the previous week's close. The VN30, which tracks the HCM City Stock Exchange's 30 best stocks, also rose by 2 per cent to 496.87 points.

The average daily value of trades during the past week declined by 24.4 per cent, however, to just VND1.3 trillion (US$61.9 million).

The market fluctuated over the course of the week, with stocks taking a hit on Friday from investor concerns about last week's decision by the Ministry of Finance to hike petrol prices by 10 per cent and the impacts the move was expected have on inflation, with economists now predicting an annual inflation rate this year of 14.5 per cent.

"The possibility of a rise in electricity rates and in inflation in March is getting a lot of investor attention," said Maritime Bank Securities Co analyst Tran Quoc Hoan. "But if the central bank considers a gradual reduction in interest rates, inflation can be controlled."

Among blue chips, heavy gains by such key stocks as food processor Masan (MSN), real estate developer Vincom (VIC) and insurer Bao Viet Holdings (BVH) in some trading days had a distortional impact on indices. Bao Viet posted gains throughout the week, leading an across-the-board gain by insurance shares that average over 19 per cent.

Rumours about possible takeovers also contributed to erratic movements on the market last week, although the rumours actually had a positive influence on indices on Tuesday, when talks of a possible Sai Gon-Ha Noi Bank (SHB) takeover of Habubank (HBB) promoted trading in other banking shares. Officials quickly moved to squelch the rumours.

Logistics firm Gemadept (GMD) was also the subject of talk of a possible takeover.

On the Ha Noi Stock Exchange last week, the HNX-Index closed up by 1.68 per cent to 72.76 points, but the average daily value of trades fell by 7.4 per cent from the previous week to VND878.8 billion ($41.8 million).

Last week, foreign investors were buyers on both bourses by a margin of VND708.2 billion ($33.7 million), with foreign investors in HCM City focusing on Sacombank (STB) and real estate developer Hoang Anh Gia Lai (HAG), while shares of Tien Phong Plastics Co (NTP) were favoured in Ha Noi.

While many stocks on the VN30 Index were heavily sold last week, speculative cash would likely to continue to pour into the Ha Noi market in the coming week, Hoan predicted.

The market could rally this week, but today might be see an additional session in retreat, he said. "It will be a decisive session. If volume is enough to absorb all shares at their peak value, the rally will be defined." — VNS

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