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VN-Index rises as central bank cuts rates
Ho Chi Minh City shares gained Tuesday as investors took heart from the central bank’s cut in the key interest rate.
The VN-Index of 163 leading firms and four closed-end funds reached 361.44 points, recording a gain of 3.67 percent from Monday’s closing value.
The trading volume continued to rise, with 19.5 million shares changing hands compared with Monday’s 17.8 million. The trading day saw 147 stocks advance and just 12 decline.
Ngo Tuan, deputy director of the Hanoi-based Kim Long Securities Corp., said sentiment is upbeat following the State Bank of Vietnam’s decision to reduce, among others, the benchmark interest rate by 1 percent to 12 percent per year.
The reduction, which takes effect today, will enable commercial banks to lower their lending interest rates.
“The interest rate cut definitely had a role in today's advance on the stock markets, but it is just one of many factors, including recent upbeat signs in the global markets and the government's swift action against the financial crisis,” Bloomberg quoted Tuan as saying.
“After four days of gains, investor sentiment is more stable, and the State Bank of Vietnam's move to cut the rate gave an additional boost to the market.”
Japan’s Nikkei ended the day up 6.3 percent after a holiday on Monday, having rallied nearly 30 percent from a 26-year intraday low it hit a week ago. South Korea's KOSPI rose 2.2 percent, up for a second day after the government unveiled an additional US$11 billion in tax cuts and other measures to boost the economy.
“The global financial crisis is certainly still a concern,” Tuan said. “But I don't think the Vietnamese stock markets will drop any lower since stock prices are already very cheap.”
Tuan added the market trend could only be identified early next year when there are enough figures about the economy and listed companies’ reports for 2008.
“From now through the end of the year, a number of new companies will be listed in a wide range of businesses from finance and real estate to pharmaceuticals and manufacturing,” Bloomberg quoted Le Ba Hoang Quang, the Hanoi-based head of research at Sacombank Securities Inc. “While this is a good addition to the variety of stocks, it will create pressure on supply in a bear market,” he said.
Quang also expects the market to slightly recover and end the year at 450
F as it has fallen to an attractive level for long-term investment. A HCMC-based broker said when ex-dividend dates approach, value investors will be looking for stocks costing less than VND20,000 and price to earning (P\E) ratios of 5-6.
“Power stocks like Na Loi Hydropower Joint Stock Co. (NLC), Ry Ninh II Hydroelectric Joint Stocks Co. (RHC), Can Don Hydropower Joint Stocks Co. (SJD) and Thac Ba Hydropower Joint-Stock Co. (TBC) are very attractive as they will pay cash dividends of 12-20 percent,” he said.
The stocks’ prices remain low, ranging between VND13,000 and VND18,000, with their P/E at 2.8-6.8.
Thanh Nien
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