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US financial market woes to impact local conduct: analysts
The behavior of the Ho Chi Minh City stock market this week will correspond to developments in the US financial market, analysts say.
The VN-Index, the gauge of 160 leading firms and four closed end funds listed on the the exchange (HOSE), rallied 10.2 percent to close at 483.81 points last Friday.
The Vietnam Small and Medium Enterprises Securities Corporation’s chief broker Doan Tran Phuong Phi told Thanh Nien Daily that the central bank’s raising of interest rates on reserves contributed to the market gains last week.
The State Bank of Vietnam last Friday raised interest rates on commercial banks’ compulsory reserves against dong deposits to 5 percent from 3.6 percent. The new rate will take effect on October 1. The central bank insisted the prime interest rate, which guides banks’ deposit and lending interest rates, will remain unchanged.
Le Van Thanh Long, investment manager of An Phuc Investment, said the move showed fighting inflation remained the government’s and the central bank’s top priority this year.
Long also said he didn’t expect the central bank to cut the prime interest rate but suggested a rise in bank’s credit growth rate, which is limited at 30 percent.
“The Vietnamese market this week can reach 520 points before making corrections if the US financial market restores calm,” he said.
Technical research of the Vietnam Dragon Securities Corp., meanwhile, showed the VN-Index was moving into a rising cycle after breaking above the resistance level of 470, but the research also forecast the index would struggle to reach this month’s highest of 570 points.
Banking and oil stocks: top picks Saigon Thuong Tin Commercial Bank (STB), the HOSE’s only listed lender also known as Sacombank, and its peer Asia Commercial Bank (ACB), the only listed bank on the Hanoi exchange, will likely to continue to move up this week, according to Long. Last Friday, Sacombank and Asia
Commercial Bank both rose for two days in a row, gaining VND600 and VND2,600 to close at VND26,000 and VND56,400 respectively.
Long also said petroleum transport firm PV Trans (PVT) and Petroleum Technical Services Corp (PVS) will be among this week’s top picks. Last Friday PV Trans moved up for the fourth straight session to close at VND21,000 while Petroleum Technical Services Corp. rose six days in a row to close at VND51,400.
In step with the global market
The exchange rose a sharp 4.73 percent to close at 459.86 last Monday as the US’s proposed US$700 billion bailout boosted investor mood.
The Bush administration proposed a $700-billion taxpayer-funded plan on September 20 to buy up toxic mortgage-related securities in an urgent effort to calm financial markets and attack the US’s housing crisis.
Under the program, the US Treasury Department would buy, or commit to buy, “mortgage-related assets from any financial institution having its headquarters in the United States,” said a copy of the Treasury Department’s draft legislation obtained by Reuters.
But a spike in international gold last Tuesday, which saw domestic gold prices surge VND350,000 to VND18.2 million per tael, or $917 per ounce, made investors anxious, selling shares heavily. The VN-Index fell into negative territory during the first two of its three daily sessions, with trading volume hitting an all-time high of 40million shares.
The market lost more than 2 percent last Wednesday because investors were distinctly cautious on the surge in international crude oil late last Tuesday on a weakening dollar and an improved outlook for US energy demand with the New York October contract settling close to $121 a barrel.
But a later oil retreat, falling below $110 a barrel, and this month’s slowing inflation and narrow trade gap restored buoyancy on the market in the last two days of last week.
Figures from the General Statistics Office showed the consumer price index this month rose at the lowest pace this year of 0.18 percent over August while imports exceeded exports by $500 million, compared with $900 million in August.
Thanhnien
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