HA NOI — Economic movements will continue to hinder stock indices from conquering new high levels, predicts Viet Dragon Securities Co analyst Nguyen Thi Phuong Lam, noting that the nation's stock market has already absorbed the postive effects of last month's supporting data.
Business operations in the first quarter of this year did not appear positive, Lam added.
"However, as investors foresaw the situation, that may not have much influence on the market," she said.
Likely to have a more positive impact was news of improved liquidity within the nation's banking system, which has already contributed to the recent rally.
Foreign investors have also been net buyers in the first quarter by a margin of VND3 trillion (US$144.2 million), once the shares of Sacombank (STB) sold by ANZ Bank to Eximbank (EIB) are excluded from the net calculation, suggesting that foreign players gave good reviews to the efforts of the Government to control negative forces in the economy.
"In an infant stock market like this, interest from foreign investors gives strong psychological leverage to domestic investors," Lam said.
On the HCM City Stock Exchange last week, the VN-Index closed on Friday at 462.52 points, an increase of 2.6 per cent over the previous week's close. The VN30 retreated on Friday to 532.3 points – a level that nevertheless represented a 4-per-cent net gain over the preceding week.
The average daily value of trades hit nearly VND1.5 trillion ($72.1 million) per session, a 58-per-cent rise, as volume averaged 96.4 million shares per day, an increase of 46.5 per cent over the prior week.
On the Ha Noi Stock Exchange, the HNX-Index concluded the week on Friday up nearly 2.8 per cent to 78.38 points. Avearge daily value was up 31 per cent to VND956.5 billion, while the daily volume averaged 96.6 million shares, a rise of 22 per cent.
Profit-taking was seen during the last two sessions, even as economic policies became a catalyst for the overall rally during the week. The real estate sector was buoyed by a looser credit policies from the central bank, allowing real estate stocks to attract new capital flows during the week. The expectation of a recovery in the property sector also benefited shares in the construction and steel industries.
"Bank and securities stocks will further benefit and create a spillover effect," predicted analysts for the financial website vietstock.vn.
The State Bank of Viet Nam reduced the refinancing rate last week from 14 per cent to 13 per cent per year, while cutting overnight interbank rates from 15 per cent to 14 per cent and the rediscount rate from 13 per cent to 12 per cent.
"We believe that the move has already been partly reflected in both the bond and stock markets in the last couple of days," VietCapital Securities Co analysts wrote in a note. Bonds were trading at lower yields while treasury bills were snatched up at recent auctions, they noted.
Overall gains on the market so far this year will help securities companies post more solid financials, even as the State Securities Commission looks forward in the coming week to announcing those brokerages which it is placing under special control pursuant to Circular No 226.
"There should be no surprise if clients of smaller firms are transferred to larger firms," said vietstock analysts.
Looking forward to the rest of this month, Lam predicted investors would take in stride new policies aimed at curbing infaltion and unfreezing investment capital, rather than look for new grounds to hope for a market rebound. — VNS