Foreign buys salvage market

Strong performances by a few blue chips saved the markets from a substantial decline last week, but trading remained sluggish on the nation's stock exchanges.

Strong buys by foreign investors helped lift shares like insurer Bao Viet Holdings (BVH), which gain 7.5 per cent on the week. Software giant FPT, real estate developer trader Hoang Anh Gia Lai (HAG), Phu My Fertilisers (DPM), and PetroVietnam Construction (PVX) all had solid volumes boosted by foreign investor interest.

Investors follow changes to the stock market at SEM securities trading floor. Strong performances by a few blue chips saved national markets from a substantial decline last week. — VNS Photo Truong Vi

FPT Securities Co analyst Le Quang Vinh said that blue chips were serving as a mainstay for the stock markets, able to lure a few long-term investors and with the potential to ignite a rally if there were a substantial easing in monetary policies or a major positive shift in economic data to reassure domestic investors unsettled by volative exhange rates, gold prices and inflation data.

The Ministry of Industry and Trade has forecast the monthly October inflation rate (CPI) to reach a manageable 0.5 per cent. But, at the middle of last week, the Government asked the State Bank of Viet Nam (SBV) to detail a plan for commercial banks to tighten monetary supplies in an effort to further stem inflation in the final quarter.

Several commercial banks, including Asia Commercial Bank, HDBank, Sacombank, Habubank and Eximbank, last Friday began lowering deposit interest rates to 11 per cent per year in compliance with an agreement between the Viet Nam Banking Association and the SBV aiming to cut capital input costs and help enterprises access credit.

Despite all these official efforts to reassure investors, the VN-Index closed out last week down by just 0.19 per cent from the previous Friday to 459.39 points, while the value of trades remained anaemic on the HCM City Stock Exchange, falling by 32.8 per cent from the previous week to a daily average of just VND635 billion (US$32.6 million), with an average volume of only 24.4 million.

Meanwhile, on the Ha Noi Stock Exchange, the HNX-Index finished off a more substantial 1.64 per cent to close at 119.69 points. Average values fell 30 per cent to VND421.7 billion ($21.6 million), on an average daily volume of only 18.9 million shares.

Foreign investors remained net buyers on both exchanges, by picking up VND375 billion ($19.2 million) worth of shares.

Pham Binh, head of analysis at PetroVietnam Securities Co, said weak market sentiment reflect the diminished expectations of domestic investors and forecast that the VN-Index would continue to range this week between 440 to 469 points, while the HNX-Index could fall as low as 117.

Vinh suggested investors keep an eye on this week's Government instruction on price stabilisation and its impact on market sentiment.

VNS