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Stocks fall on mixed economic data
Stocks sank on both national trading boards last week, with economic news failing to boost investor confidence – a downward trend that was expected to extend into this week.
The Ministry of Finance's decision to lower petrol prices by another VND700 to VND21,200 per litre had little impact on the market. Meanwhile, consumer prices in the major cities of Ha Noi and HCM City in June were reported to have receded slightly from the prior month, with a deflationary trend now raising concerns of a looming recession.
"It seems investors are waiting for a clearer indication of economic trends, such as credit growth figures, second-quarter growth, and second quarter earnings," FPT Securities Co analyst Le Thi Bich Hang wrote in a report.
The economy has not shown many positive changes despite a series of Government support policies, Hang said. GDP growth in the first three months was disappointing, about 70 per cent of businesses reported losses during the period, and credit growth continued weak through May, she added.
Bad debt levels in the nation's banking system worsened, climbing from just over 3 per cent at the end of last year to 4.14 per cent and a total of VND108 trillion ($5.14 billion) on April 30. Bad debt ratios have been rising at an alarming rate of 8.6 per cent per month, reflecting rapidly growing levels of defaults on commercial loans.
On the HCM City Stock Exchange last week, the VN-Index lost 1.93 per cent over the course of last week, closing on Friday at 427.17 points. Poor trading during the week dragged the volume of trades down 20 per cent from the previous week's level to a daily average of about 51.5 million shares and a value averaging just VND822 billion ($39 million) per session.
Banking, seafood and chemicals shares were the only showing overall gains during the week. All other sectors dropped, including information technogly shares, which fell by an average of 5.4 per cent on average; mining firms, which lost 3.6 per cent; and securities companies, which declined by over 3 per cent.
The VN30 Index, which tracks the HCM City bourse's 30 leading shares by market capitalisation and liquidity, also sank by 1.49 per cent to stand at Friday's closing bell at 500.34 points.
The Bank for Investment and Development of Viet Nam (BIDV), the nation's third largest bank, made an initial public offering last December of shares representing 3 per cent of equity and had planned for its shares to debut on the HCM City exchange tomorrow. However, BIDV announced last week that it would delay listing its shares to the end of next quarter due to gloomy market conditions, saying that listing at the present time might negatively affect share values and harm shareholder interests.
On the Ha Noi Stock Exchange last week, the HNX-Index also gave up 2.2 per cent of its value to close the week at 73.31 points. The daily value of trades during the week averaged about VND366 billion ($17.4 million), down 28.6 per cent from the previous week.
Foreign investors were net buyers last week on both exchanges. They picked up shares worth a combined net of over VND132 billion ($6.3 million), of which VND116 billion ($5.5 million) were disbursed in HCM City and VND16 billion ($762,000) in Ha Noi
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