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VN-Index recovers from mid-week slump
Depressed investor sentiment drove the VN-Index down to a three-year low in the middle of last week before a rally on Friday brought the market to only a modest overall loss on the week.
The Index was down 4.22 points to 314.74, a loss of just 1.3 per cent from the previous Friday's close.
Daily volumes remained low, with only an average of about 11.3 million shares changing hands per day, 3.5 per cent lower than the previous week's average. Daily values were around VND293.5 billion (US$17.8 million), a decline of 1.1 per cent.
Among the few bright spots in last week's trading, according to FPT Securities data, were shares in the tourism sector, gaining 3.17 per cent, followed by healthcare at 1.72 per cent and retail at 0.39 per cent. Food and beverage shares, building materials and household products were among areas dedining the most, all dropping around 8.2 per cent on the week.
The analysis department at SME Securities Co expressed optimism that the VN-Index plunging below the psychologically important 300-mark would stimulate demand for shares. They expected the market to maintain that supporting mark of 300 this week, absent any additional bad news.
Good news for the domestic market last week included the Government's announcement on Tuesday that the nation's inflation rate had slowed for a second consecutive month and that foreign direct investment inflows continued to increase, totalling US$59 billion so far this year.
Market researchers said that sharp recent cuts in both deposit and lending interest rates had spurred investment in a number of sectors.
Nevertheless, industrial production was at an 11-month low in November, and a seminar on the business climate held last week heard that it would be difficult for the economy to achieve 6.5 per cent growth in 2009.
The tourism sector has also seen dramatic declines in foreign visitors over the last few months - all due to the global economic downturn, according to Government reports.
The global slowdown was also expected to reduce foreign-investment influx by half next year, said director of the Ministry of Planning and Investment's Foreign Investment Agency Phan Huu Thang.
On the stock market, foreign investors last week continued to pull capital out of the market, with net sales for the week totalling VND151 billion ($9.2 million) and total sales accelerating by 28 per cent over the previous week to about 13.5 million shares.
"The way I look at it, a slowing market opens opportunities for long-term investors," said Dinh The Hien, a financial expert. "The rest of the year is an opportunity for those who seek for profits over the next two years."
FPT Securities Co analyst Tran Quang Vinh said early week trading developments would determine market trends for all of the coming week. If both HCM City and Ha Noi markets increased early in the week, the market might see an upward trend over the short term, he said, but if the indices fell, the market might hit a new rock bottom.
"We can't say about a market rally from Friday's rebound," said Vinh. "Recent fluctuations on the world and domestic stock markets have badly affected investor sentiment."
Vinh said he expected the VN-Index to range between 300 and 330 points this week.
In Ha Noi last week, a dramatic rebound on Friday helped the HASTC-Index gain a modest 0.28 per cent overall to end at 104.2 points, despite slumping to its all-time lowest level in mid-week. Activity remained sluggish with an average daily trading volume of under 7.6 million shares and a daily turnover of VND189 billion ($11.5 million).
The HASTC-Index would likely range between 95 and 115 points this week, predicted Vinh.
Tran Van Dung, director of the Ha Noi Securities Trading Centre, said more positive moves on the world market were needed to stablise investor psychology.
"A prolonged world economic crisis makes investors cautious about measures taken by the US and EU governments," said Dung. "They doubt whether the measures can work.
"Investors should note that, as many international organisations have foreseen, the world economy is still facing difficulties but is gradually stabilising," he added.
To encourage investors, Dung urged domestic authorities to postpone the imposition of new income and capital gains taxes on securities trading, which were slated to take effect on January 1.
Viet Nam News
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