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Investors cheer low inflation, delayed electrical rate hikes
Stocks are expected to extend their rally into this week as investors' short-term economic concerns related to inflation have eased with the release of March CPI data and the decision by Electricity of Viet Nam to delay any further electrical rate hikes.
The nation's consumer price index (CPI) in March was reported to have risen just 0.16 per cent over February, the slowest pace in the past 20 months.
Meanwhile, electricity rates remain below production cost and EVN is under pressure to increase the prices to cover losses. Current regulations would allow EVN to increase rates again effective March 20, three months after its previous rate hike in December 2011. But the official determination to control inflation has persuaded the utility to delay the move for a while.
FPT Securities Co's analyst Nguyen Ngoc Tuan wrote in a weekly report that the VN-Index this week could test the resistance mark of 450 points and likely head to 470 points on the strength of a solid performance by shares tracked in the VN30 Index.
In the past week, Tuan said, investors became more optimistic, helping lift stocks on both national stock exchanges. Rising capital inflows helped keep market volumes at a high level.
On the HCM City Stock Exchange, the VN-Index gained 3.66 per cent over the course of last week, closing out Friday's session at 454.10 points. Blue chips led the rise, with the VN30 Index – which tracks the performance of the 30 leading shares by market value and liquidity – increased by over 3.2 per cent to conclude the week's trading at 512.84 points.
The value of trades averaged over VND1.13 trillion (US$54 million) per session, on an average daily volume of nearly 78 million shares.
Shares of mineral companies were the biggest gainers, rising by an average of 11.9 per cent over the previous week, while securities companies also outperformed the market, increasing by an average of 8.5 per cent on the week. Real estate and bank shares also rose by over 4 per cent on average.
Binh Thuan Hamico Mineral (KSA) led the market, gaining 25 per cent last week following the confirmation from the company's chairman that KSA had sufficient funds on hand to pay a 10-per-cent as earlier promised on its net profit of over VND35 billion ($1.7 million).
Agribank Securities (AGR) and Sacombank Securities (SBS) closely followed with a rise of 24 per cent and 21 per cent, respectively. Securities shares are expected to continue their growth this week after the information that companies' capital reserves set aside to cover losses incurred by share price decreases last week will be reimbursed partly or wholly.
On the Ha Noi Stock Exchange, stocks of small securities firms were also the biggest winners last week, with PetroVietnam Securities (PSI), Hai Phong Securities (HPC), An Phat Securities (APS), and Orient Securities (ORS) all gaining by 30-34 per cent.
Overall, the HNX-Index rose by over 6.4 per cent over the course of the week, closing on Friday at 77.57 points. Market volume increased 15 per cent to a daily average of 92 million shares, worth nearly VND921 billion ($43.9 million) per session.
Foreign investors continued to be net buyers again last week by picking up another VND417 billion ($19.9 million) worth of shares on both exchanges. They focused buys on bank shares, including Sacombank (STB), Military Bank (MBB), Vietcombank (VCB) and Habubank (HBB).
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