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Power hike, inflation hit market

Update: December, 26/2011 - 09:59

HA NOI — Year-end is the time when a range of economic indicators are announced, with profound impacts on the stock market. The information within the greatest impact on the domestic market last week was the announcment that Electricity of Viet Nam (EVN) had hiked electricity rates, effective immediately, by 5 per cent.

News also hit the market last week that inflation rate for the year reached 18.6 per cent, modestly exceeding official targets.

"The Government has failed to hold inflation under 17 per cent, and the higher electricity rates will affect next month's inflation," said VietCapital Securities Co analysts.

That also meant tight monetary policies would continue, said FPT Securities Co analyst Ngo Van Quy.

The State Bank of Viet Nam also announced that bad debt in the nation's banking system had hit a total of VND85.3 trillion (US$4 trillion), accounting for 3.4 per cent of total outstanding loans.

"Although the ratio remains under 5 per cent, it doesn't mean there are any fewer risks," Quy commented.

Bad debts in financial leasing companies had soared to 50 per cent, 15 times higher than the average for all credit institutions, announced the National Financial Supervisory Commission.

Industrial growth also slacked off this year, increasing by only 6.8 per cent over last year, according to the General Statistics Office. Notably, the growth rate was 0.3 of a percentage point lower than in 2009 when the global economy fell into recession.

On the Ha Noi Stock Exchange, the HNX-Index hit a new all-time low of only 58 points, closing off 3.6 per cent from the previous Friday's close. The average market value retreated nearly 6 per cent to VND241.1 billion ($11.4 million) while the average trading volume decreased around 8 per cent to 28.3 million shares.

On the HCM Stock Exchange, the VN-Index closed out the week at 356.21 points, sliding 3.1 per cent from the prior week. The value of trades improved by 5 per cent, averaging VND757.34 billion ($35.7 million) on an average daily volume of 41.2 million shares.

Blue chips failed to sustain the market as they were submerged under sell pressures.

Last week, financial services company Credit Suisse agreed to become a strategic shareholder in Sacombank (STB), although the remaining stake available for foreign ownership in the bank is just 4 per cent. Credit Suisse may therefore purchase STB shares from other foreign shareholders, or the bank will increase its charter capital.

STB last week continued to attract the greatest money on the market. Real estate group Vincom (VIC) followed, primarily backed by transactions from foreign investors. Other stocks, such as telecom equipment provider Sacom (SAM), Tan Tao Investment Corp (ITA) and property developer Hoang Anh Gia Lai (HAG), were also heavily traded.

Fund certificates and banking shares bucked the trend, adding an average of 1.7 and 0.6 per cent, respectively, while securities companies overall lost 11.4 per cent. — VNS

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