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Market week ends in split decision
With three out of five gaining sessions last week on the HCM City Stock Exchange, the VN-Index concluded last week up 0.97 per cent over the previous Friday's close, reaching 383.35 points. On the Ha Noi Stock Exchange, meanwhile, the HNX-Index retreated by a cumulative 1.66 per cent, closing on Friday at 61.25
Market volume and value remained sluggish on both bourses. In HCM City, the volume of trades dropped nearly 18 per cent in the course of the week, averaging 28.6 million shares worth an average of VND432.4 billion (US$20.6 million) per session. In Ha Noi, the average volume plummeted 25.7 per cent to just 20.8 million shares, worth VND192.35 billion ($9.2 million) per day.
After Sacombank (STB) announced it would buy back 100 million shares last week, STB became the leading share by volume, with 23 million sold back through both order matching and negotiated trades – over half by foreign investors.
Overall, foreign investors concluded last week as net sellers of a combined VND141.6 billion ($6.7 million) on both bourses.
News last week of a slight reheating of inflation in November disappointed investor expectations. However, monthly increases have remained below 1 per cent for the past four months, encouraging investors to expect commercial banks to reduce interest rates in the near future.
However, Director of the Viet Nam Centre for Economic and Policy Research, University of Economics and Business under the National University of Ha Noi, Nguyen Duc Thanh, said that this would not be easy in light of other current economic risks.
The internal problems of commercial banks – including high bad debt levels and weak liquidity – have had negative impacts on the interbank market, pushing interbank rates as high as 30 per cent per year and making it unlikely that interest rates would drop to the target of 17-19 per cent anytime soon, Thanh said.
"Therefore, listed companies will continue to face difficulties in accessing loans next year and cash flows into the stock market will likely continue to decline," Thanh said.
Viet Capital Securities Co analysts agreed that bad debts were now among the market's top concerns. Although banks maintained an average bad debt ratio of just 3.2 per cent in October, according to official figures, but analysts suggested the actual figures could be much higher.
Scandals surrounding securities companies last week also continued to adversely affect investor psychology. Trang An Securities Co (TAS) joined SME Securities Co as the latest brokerage to receive warnings from the Viet Nam Securities Depository for violations of clearing and settlement regulations.
PetroVietnam Trade Unision Finance Investment Corporation has also filed a lawsuit against Wall Street Securities Co, claiming the brokerage owed the corporation up to VND100 billion ($4.8 million) in past due debts.
Analysts for Vietstock also warned that securities companies may be feeling greater pressure to sell off mortgaged shares, making any market recovery even less likely.
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