HA NOI — Stock indices advanced last week on the strength of three recovering sessions. On the HCM City Stock Exchange, the VN-Index gained 2.17 per cent over the previous Friday's close to end the week at 416.98 points, while on the Ha Noi Stock Exchange, the HNX-Index also added 3.5 per cent to close at 70.58 points.
The average daily value of trades fell slightly in HCM City to VND536 billion (US$25.5 million) but edged up in Ha Noi by 3.3 per cent to VND293.4 billion ($13.9 million).
Last week, the Ha Noi exchange rolled out the HNX30 Index, tracking the 30 leading shares on the northern bourse in terms of market capitalisation and liquidity. The HNX30 closed on Friday at 134.53 points, an increase of 5.6 per cent from its starting point.
In HCM City, the VN30 Index, which tracks the southern exchange's top shares, rose by 0.35 per cent during the week to conclude Friday's trades at 492.36 points.
Bottom-feeding gradually appeared towards the final sessions of the week, and investors gravitated towards such stocks as real estate developer Sacomreal (SCR), financial conglomerate Ocean Group (OGC) and Southern Rubber Industry Co (CSM). In Friday trading in HCM City, around 450 stocks posted gains, with nearly 200 codes rising to their ceiling prices.
"The VN-Index is flickering in a short-term uptrend," said FPT Securities Co analyst Le Thi Bich Hang, adding that the Index might face some troubles as it approached 430-435 points.
Against this generally upward trend, foreign investors remained cautious. They were net sellers in HCM City last week by a margin of VND101 billion ($4.8 million), although they were buyers in Ha Noi by a modest margin of just VND700 million ($33,000).
Some positive signs impacting markets last week included declining deposit and lending rates and higher expectations for credit growth. With inflation continuing to recede, Hang predicted, "deposit rates could be reduced again, shifting cash from deposits to securities."
Customs data also saw the country generate a trade surplus in June totalling $360 million, bringing the nation's trade deficit in the first six months of the year down to $160 million.
None of this economic information was significant enough to boost the market, said Maritime Bank Securities Co analyst Tran Quoc Hoan. Meanwhile, the European debt crisis continued to have a clearer impact on Asian economies, with growth rates in the region slowing and forecast for the region revised negatively.
Securities firms along with investors were also still hoping for a major change in credit for the real estate and manufacturing sectors, Hoan added.
According to the State Bank of Viet Nam's banking inspection and supervision division, bad debt in the commercial banking system as of March 31 had climbed to over VND202 trillion ($9.6 billion), or 8.6 per cent of total outstanding loans.
The lower credit quality was caused by declining financial capacity of enterprises, the business operations of which depended heavily on bank financing, as well as weak risk management practices among credit institutions.
"The market is still facing some declines before reaching a notable rally next month," Hoan predicted, recommending that investors sell in earlier sessions this week if the market did not see dramatically increasing prices or trading volume. "Money should be kept until a more obvious speculative opportunity appears." — VNS