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Stocks advance on brighter economic prospects
The VN-Index last week moved back above the psychologically-important 530-mark, as positive economic data helped shore up investor confidence.
Good economic news last week included figures indicating that inflation was under control, foreign direct investment disbursements at significant levels, the State Bank of Viet Nam keeping the prime interest rate unchanged, and Japan pledging its largest-ever official development assistance (ODA) total ever to Viet Nam.
News about another possible Government stimulus package next year, and hints that the State Bank would set the credit growth target for this year at 30 per cent, also helped boost the market above 530 on Friday, said FPT Securities Co broker Nguyen Binh Duong.
"Positive economic news, along with support from global stock market developments, have given the domestic exchange several straight weeks of increases with quite solid gains," said Duong. "We believe that the domestic market is still in a medium- to long-term upward trend."
The VN-Index added 17.36 points overall last week, or 3.34 per cent, to close at 536.53. Transaction levels on the HCM City Stock Exchange declined slighly from the previous week but remained significant, with trading volumes averaging 55.1 million shares per day and daily revenues averaging VND2.2 trillion (US$123.6 million).
On the Ha Noi Stock Exchange, the HNX-Index ended the week at 167.64, up 5.66 points – or 3.49 per cent – over the previous Friday’s close.
Trading volumes on the northern exchange averaged 31.6 million shares per day, up 14 per cent over the previous week, while daily turnover reached about VND1.1 trillion ($61.8 million), an increase of 17 per cent. Le Dat Chi, a financial expert from HCM City Economics University, cited World Market Indices data as rating the VN-Index at the top of world stock indices in growth, with an increase of 116.86 per cent since March. But he said the domestic market continued to be attractive, with an overall price-to-earnings ratio now at about 19.7.
The P/E ratios were even more attractive in some sectors, he noted, with mining shares at 10.39, construction at 10.86, and agriculture, forestry and fisheries at 9.41.
Foreign investors last week continued to demonstrate confidence in the domestic markets. In HCM City, foreign investors were net buyers of about 2.5 million shares, worth a total of VND218.5 billion ($12.3 million). In Ha Noi, they were responsible for a net purchase volume of 1.2 million shares, worth a total of VND73 billion ($4.1 million).
Nguyen Thanh Ha, head of the Saigon Securities Inc economic analysis department, said pressure from an increasing supply of shares on the market could be noticed in the coming months, as demand during May through July had already absorbed significant supplies created by such major listings as those of Bao Viet Holdings, Vietcombank and Vietinbank.
New supplies would come from the upcoming initial public offerings of major firms such as Mobifone and BIDV, and listings of additonal shares by beverage makers Sabeco and Habeco.
Meanwhile, some State-owned enterprises were unloading shares they had continued to hold in listed firms in order to raise capital and focus on their core lines of business, with Electricity of Viet Nam’s sale of shares in Pha Lai Thermal Power being a major example.
"With this pressure, the domestic stock market will still have to overcome many challenges in order to hold its ground and establish a clear trend during the rest of the year," Ha said.
Meanwhile, the unlisted public company market last week continued to show few signs of life as the UPCoM-Index closed on Friday at a new low of 65.44 points, marking two weeks of continuous declines.
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