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Business assistance vow lifts market sentiment
Word of Government plans to support enterprises helped boost stocks late last week.
Vu Duc Dam, the minister-level chairman of the Government Office, said that, in the next few days, the Government would issue a resolution that, while not a stimulus package, would offer various fiscal, monetary and administrative measures, including tax relief.
Among the measures, small- and medium-d enterprises in agriculture, real estate, construction and building materials production would be entitled to a 30-per-cent reduction in this year's corporate income tax. In addition, value-added tax payments in the second quarter will be delayed for six months.
The Government will also propose that local governments grant a 50-per-cent reduction in land use fees for businesses this year.
The Ministry of Finance has estimated the value of the relief package at VND29 trillion (US$1.3 billion).
"We don't expect these measures to put enterprises in sound condition, but it can reduce the challenges facing them," said Maritime Bank Securities Co analyst Tran Quoc Hoan.
Shares concluded the three-day trading week higher on both stock exchanges. Although they saw fewer trading days after the national holiday, the average daily value and volume of trades improved over the previous week – suggesting that demand for stocks on the market was still high, PetroVietnam Securities Co analysts wrote in a note.
On the HCM City Stock Exchange, the average daily value reached VND1.5 trillion ($71.4 million), up 12 per cent over the prior week, on an average daily volume of 110 million shares. The VN-Index edged up 0.5 per cent over the course of the week to 476.32 points.
The Ha Noi Stock Exchange saw about 94.8 million shares change hands per session, an increase of 30 per cent, for an average value of VND955.8 billion ($45.5 million). Inching 1.8 per cent up over the previous Friday's close, the HNX-Index concluded the past week at 81.27 points.
"A large amount of cash is still retained inside the market as foreign investors have kept on buying and money from other investment channels pours in," Hoan said. Foreign investors last week were net buyers on both bourses, picking up shares worth a combined margin of VND325.3 billion ($15.4 million).
Technical indicators indicated that the VN-Index would see a strong rally in the coming two or three weeks, he added.
"We expect the VN-Index will break through the resistance level of 475-480 points, while the HNX-Index will get past 80-82 points."
PetroVietnam Securities Co analysts were more cautious, suggesting that the market need more trading days to test the trend.
On Saturday, Sai Gon-Ha Noi Bank (SHB) shareholders approved the planned merger with Habubank (HBB). The new bank would have a higher bad debt ratio of 12.88 per cent, mainly due to Habubank's loans to troubled State-owned shipbuilder Vinashin Group, said Sai Gon-Ha Noi Bank general director Nguyen Van Le.
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