Shares rise on foreign investor spending
HA NOI (VNS)â€” Domestic stock indices rose last week, buoyed by the return of foreign investors as net buyers on Friday.
The market rebounded strongly on the last trading session of the week, pushing the VN-Index on the HCM City Stock Exchange up nearly 10 points to 493.99 points. The week was up 1.7 per cent on the previous Friday’s close.
But trading value and volume declined by 7 per cent and 11 per cent respectively, averaging VND644.4 billion (US$30.3 million) and 32 million shares per session.
On the Ha Noi Stock Exchange, the HNX-Index also added 0.7 per cent to 63.12 points by the end of the week. However, the average trading value and volume fell around 16 per cent, compared to the previous week, to VND123 billion ($5.8 million) and 16.4 million shares.
Foreign trading boosted shares on Friday, with the net buying value VND58 billion ($2.7 million) in HCM City â€“ the highest in the last 30 days. Meanwhile, the figure in Ha Noi was more than VND4 billion ($190,400).
Another driver for stocks was the revision of economic outlook. The World Bank predicted Viet Nam’s GDP growth this year could reach higher than last year â€“ 5.3 per cent â€“ while HSBC forecast the Vietnamese economy would grow by 5.1 per cent in the third quarter. The World Bank also said inflation this year might be 8.2 per cent and possibly fall to 7.9 per cent in 2014.
Meanwhile, the State Bank of Viet Nam abandoned the regulation that banks stop taking gold deposits, however banks would need a permit for this activity.
According to the financial information website vietstock.vn, the reduction of interest rates in several major banks had helped money flow back to securities. On Thursday, both Vietcombank and Agribank reduced their deposit rates for one-month loans to 5 per cent per year, while the common rates on the market ranged between 6.5-7 per cent. Interest rates for other terms were held.
Investors expected when the Viet Nam Asset Management Company (VAMC) came into operation on July 9, there would be a drastic change in the treatment of bad debts and unfreezing of credit.
PetroVietnam Securities Co analyst Dao Hong Duong said, however, it would take time as the target of handling VND80-100 trillion ($3.7-4.7 billion) in bad debts, equivalent to 60-70 per cent of the total, seemed unfeasible in the six months left in the year.
In addition, banks which had to offload debts to the VAMC had not been revealed.
“Banks will still face capital losses due to the VAMC’s very strict rules,” Duong said, adding that the possibility that banks could support the economy was low.
He said impacts from the macro-economy would cool down this week. The market would be mainly affected by corporate performances in the first half, the percentage of cash dividend payments and the expectation for the second half of the year.
The price-to-earnings ratio of the VN-Index was 13-14 times, which was acceptable as it was lower than other countries in the region. He predicted the ratio for the VN-Index would range between 12-15 times.
“Business results of listed companies in the second quarter are not much different from the first quarter, so a high growth of the VN-Index is not likely in the short term.”
Meanwhile, the price-to-earnings ratio of the HNX-Index was 19-20 times, which suggested the earnings-per-share ratio of businesses on the northern exchange had decreased in the first quarter.
“Enterprises will need more time to improve their performances,” Duong said. â€” VNS