Thang Long - Hanoi

Large-caps leave stock exchange blue
23/05/2011 | 12:16:42
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Blue chip wash outs concluded a disappointing week for domestic investors.

On the HCM City Stock Exchange, the VN-Index lost 9.76 percent last week to close at 432.87 points – the lowest standing since November 22, 2010.

Blue chips contributed to the market loss by falling 11.57 percent, with key pillars such as insurer Bao Viet Holdings (BVH) and multi-business Masan Group (MSN) fell consecutively to their floor prices.

BVH closed on May 20 at 77,500 VND, down from 90,000 VND last Monday while MSN closed on May 20 at 97,000 VND down from Monday's 117,000 VND.

"As the pacemakers for the VN-Index in recent months, which took turns leading the VN-Index and boosted it to 480 points in April, it was hard to accept their wash-out in just one week," said Nguyen Van Khanh from a-based securities company.

Khanh watched Vietcombank after it announced a big additional listing from the State's holdings which lifted its shares (VCB) to the ceiling price in two earlier sessions sending VCB to the top as the new VN-Index pacemaker.

"Unfortunately, the wash-out was big enough to stagnate the trading in VCB," he said, blaming the media for mentioning a new VN-Index calculation at an inopportune moment.

"Blue chips are the most popular stocks among foreign investors and exchange-traded funds who seems to be the most active in domestic markets right now," he said, revealing that this sector purchased a net 74.2 billion VND (3.5 million USD) last week, compared to 45.5 billion VND (2.2 million USD) in the previous week.

"But the recalculation plan (which may not be governed by blue chips) might worry them to boost sell-offs or restructure their investment portfolio," he added, noting substantial sell-offs by this sector last Friday.

The value of the HCM Stock Exchange enjoyed a 16 percent increase over the previous week to 517 billion VND (24.6 million USD) per day on an average volume of 26 million shares traded.

On the Hanoi Stock Exchange, the HNX-Index fell 6.12 percent last week, plunging to a historic low of 76.98 points.

Value of the Hanoi market rose 2.76 percent to 306.4 billion VND (14.6 million USD) per session, with nearly 25 million shares traded each day.

"Although the value sounds higher and hints at attempts to buy at low prices, the figure is modest," said analysts at FPT Securities, who blamed the poor performance on instabilities in the credit system.

They noted the deposit rates on the open-market which increased from 14 percent to 15 percent, and the climbing deposit rates in commercial banks forced the State Bank of Vietnam to post more warnings to credit institutes.

"It sounds like the State Bank is insisting on the target to curb inflation," Khanh said. "As a result, the stock markets may continue this bearing until the third quarter".

The May inflation rate for Hanoi City was released late last week revealing a lower increase of 1.76 percent compared to the March and April rates. The nation's inflation rate is expected to be lower in May, "but this hardly encourages a loosened monetary system right away", said Khanh.

The FPT Securities' analysts said that the sharp fall last week might create some technical rallies this week "but the capital boost could remain cautious". /.
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