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Short-lived rally keeps Index stable
Two days of gains during a strong mid-week rally prevented the VN-Index from plunging too deeply last week, during a period in which economic uncertainty has remained a major hindrance to domestic stock market growth.
The Index lost 6.83 points overall, or 2.7 per cent, to end the week at 245.74.
Volumes improved significantly, averaging about 10 million shares per day, an increase of 25 per cent over the previous week's average. Daily value reached around VND210 billion (US$12.4 million), compared to VND160 billion ($9.4 million) the previous week.
A strong rebound of 3.75 per cent on Wednesday was attributed to a few shreds of good economic news including the announcement that the nation saw a trade surplus in the first two months of 2009, that Japan was resuming its official development assistance (ODA) payments, and the State Bank of Viet Nam had lowered the compulsory dong reserves requirement imposed on commercial banks.
Nevertheless, foreign investors continued to flee the market, selling a net of 6.1 million shares, worth VND85.8 billion ($5 million).
While some analysts were worried that a weak dong would discourage foreign investors in the short- to medium-term, the Government last week affirmed that it had no plan to adjust the current foreign exchange rate.
According to FPT Securities Co data, insurance shares gained the most last week, increasing 4.32 per cent, followed by banking shares, up 3.07 per cent. Sacombank (STB) and Asia Commercial Bank (ACB) saw strong gains following the State Bank move to lower compulsory reserve requirements.
Financial services posted the sharpest decline, dropping 11.35 per cent, followed by communications at 4.93 per cent. Shares of oil and gas, retail and chemicals all fell by around 4.5 per cent.
But Vinaconex Group (VCG) was also strongly up on mobile provider Viettel's acquisition of 35 million shares of VCG, worth VND700 billion ($40 million).
FPT Securities Co analyst Nguyen The Dinh said the increases of such major shares gave impetus for the market to go up further on Friday, but it wasn't to be.
"With unstable investor sentiment, caused by continuous selling by foreign investors and concerns over the global and domestic economies, the market needed even more supporting news," Dinh said.
Dinh expected the VN-Index to range between 230 and 257 this week, adding that there was a high possibility that the market would rally slightly within two to three days. "Major shares which didn't rise significantly last week would be good choices for investors this week," he confided.
Nguyen Trong Nghia, director of investment consultancy at Thang Long Securities Co, said blue chips tended to decline less than small and medium caps during the past year, but rallied the fastest. Blue chips gained about 71 per cent during the June-September period of 2008.
"This could absolutely repeat in 2009," said Nghia.
But Dinh suggested investors should invest "just a part of their funds" in the current economic context.
In Ha Noi last week, the HASTC-Index closed the week at 83.96 points, down a neglible 0.29 per cent over the previous Friday's close.
Trading volumes on the northern market averaged at 5.5 million shares per day, up a full 45 per cent over the previous week's average. Daily turnover was about VND100 billion ($5.9 million), an increase of 42 per cent.
Dinh said he expected the HASTC-Index to range between 78 and 87 points this week.
VIETNAMNET, VIET NAM NEWS
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