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VietNamNews

Tighter interest rate cap boosts shares

Update: June, 11/2012 - 11:03

 

Customers at a branch of the Ha Noi-based Bao Viet Securities Co. Shares gained value on both national stock exchanges last week. — VNS Photo Viet Thanh
HA NOI — The stock market cheered a week of rises despite a gloomy start on Monday. Toward the end of the week, investors increased their bargain-hunting on news of a tighter cap on deposit interest rates paid by commercial banks, widely blamed for keeping commercial lending rates high.

The news was not only expected to improve investor confidence in the stock market but also to encourage people to reduce bank deposits in favour of other investment channels, Nguyen Duc Hung Linh, chief of Saigon Securities Inc's analysis division, told the online news VnEconomy.

"Howver, the two last rate cuts did not produce such effective impacts," Linh admitted, blaming two factors: lending interest rates remained high and the securities market remained in the doldrums.

"Viet Nam's problems, such as the efficiency of State-owned enterprises and public investments, are long-term issues, and if these issues cannot be solved comprehensively, any measure such as a reduction in interest rates will only help boost the stock market in the short-term," Linh said.

On the HCM City Stock Exchange last week, the VN-Index rose 0.96 per cent from the previous week's close, concluding Friday's session at 432.90 points. Bottom-seeking pushed the average daily volume of trades up by 23 per cent over the prior week to about 98 million shares per session, with an average daily value of VND1.72 trillion (US$81.9 million).

Negotiated transactions suddenly soared, driven by a huge spike in trading in shares of two banks, Eximbank (EIB) and Sacombank (STB). EIB is also STB's largest shareholder, with a 10.7-per-cent stake in the STB.

Mining shares were the biggest gainers last week with an average increase of 4 per cent, followed by shares in the real estate and construction sectors, which rose by an average of over 2 per cent each. Binh Thuan Mineral Industry (KSA), Ha Nam Mineral (KSH), Bac Giang Mining (BGM) and Nari Hamico Minerals (KSS) all advanced by 15-25 per cent over the course of the week.

The VN30 Index, measuring the performance of the 30 leading shares by market capitalisation and liquidity, closed on Friday at 508.15, a gain of 0.49 per cent.

On the Ha Noi Stock Exchange last week, the HNX-Index also increased nearly a per cent, closing on Friday at 75.08 points. The average daily value of trades improved to over VND514 billion ($24.5 million).

In contrast to domestic investors, foreign investors continued to unload shares last week on both exchanges, with a combined net sell of VND429.3 billion ($20.4 million). The sold substantial quantities of such blue chips as STB, Saigon Securities Inc (SSI) and real estate developer Hoang Anh Gia Lai Co (HAG).

Heavy sell pressures among foreign investors derived mainly from the turmoil in the eurozone since negative domestic news, such as slowed economic growth and the stagnation of production, were not new to these investors, said HCM Securities Co deputy director Trinh Hoai Giang. — VNS

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