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Local markets rally on global rate cuts
Positive economic measures on both the global and domestic fronts helped give a boost to stock indices over the course of last week.
The VN-Index increased a modest 4.94 points over the previous week, or 1.44 per cent, to close at 347.05.
Liquidity significantly improved over last week, as trading volume on the HCM City Stock Exchange reached nearly 84 million shares for a total turnover of VND1.93 trillion (US$114.88 million).
Many investors had expected the VN-Index to hit rock-bottom at 300, but the index stopped its downward slide at 322.8 and rebounded on Wednesday, in line with mid-week stock market rallies around the world.
"The most interesting news to investors last week was that the US Federal Reserve cut interest rates by half-a-percentage point to 1 per cent, the lowest level in nearly half-a-century in an effort to prop up credit markets and stimulate consumption," said Nguyen Van Quy, an analyst from FPT Securities' Analysis Department.
The Bank of Japan also cut interest rates to 0.3 per cent.
"The rate cuts boosted investor sentiment, facilitating strong rallies on global stock markets," said Quy. "But experts worried that the markets were over-excited as the moves would not immediately help prevent large-scale economic recession."
Meanwhile, Viet Nam's General Statistic Office early last week issued figures showing a 0.19-per-cent drop in the consumer price index (CPI) in October, the first decline in 18 months.
Growing optimism was reinforced by a Ministry of Finance decision to cut retail petrol prices by VND500 per litre, raising the cumulative reduction in petrol prices in October to VND2,000 per litre.
But, Quy said, "the business climate is still facing difficulties and world oil prices are likely to decline further, so the fuel price cut didn't have a big impact on the market last week."
Oil and gas shares lost 2.6 per cent of their value during the week, while industrial goods and services fell 5.16 per cent and food and beverage shares dropped 4.92 per cent.
According to FPT Securities data, banking and finance was the only sector in which shares gained on the week, rising 0.04 per cent in value.
"It will be difficult to forecast a market trend in the coming weeks," said Quy. "In addition to unpredictable moves on global markets, local investor psychology has been affected by foreign investors' net sales for the past few weeks."
Last week, foreigners' net share sales reached VND300 billion ($18.2 million), while their net bond sales reached nearly VND5 trillion ($297.62 million).
Nguyen Son, head of the State Securities Commission's market development department, said foreigners' total net sales in October were about $1 billion.
But, Son said, "in a context in which Viet Nam's foreign currency reserves are significant, net foreign investor sales at this level haven't had significant impacts on the domestic market."
Meanwhile, PetroVietnam Finance (PVFC) was expected to list 500,000 shares on the HCM City exchange today, with a combined value of VND5 trillion ($300 million).
Quy said the additional shares would "have a certain influence" on the VN-Index, expecting the index to range between 320 and 340 points this week.
At the Ha Noi Securities Trading Centre, the HASTC-Index closed the week at 114.88, 3.3 points or 2.95 per cent higher than the previous Friday. About 43.6 million shares changed hands for a total value of VND1.1 trillion ($65.48 million).
VNA
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