Bright outlook for VN-Index in December

Hanoi (VNA) - November’s uptrend in Vietnam’s stock market could extend on the back of strong capital inflows from both domestic and foreign investors, analysts said.

The VN-Index of the Ho Chi Minh Stock Exchange rose 2.65 percent last week, concluding December 1 at 960.33 points, the highest since December 7, 2007.

Vietnam’s key market index gained nearly 13.5 percent in the past one month and has climbed 44.5 percent since the beginning of this year.

In north, the HNX-Index rose 4.2 percent last week, closing December 1 at 115.49 points. The northern market index has also expanded over 44 percent this year.

The Ministry of Industry and Trade (MoIT)’s announcement on the long-awaited competitive share offering of Sai Gon Beer-Alcohol-Beverage Corporation, better known as Sabeco (SAB), and the Development Investment Construction Joint Stock Company (DIG) has spurred investors’ interest in the stock market.

SAB was also among the biggest gainers with a weekly gain of 3.5 percent given that it is the most expensive stock in the market, at 330,000 VND (14.47 USD) per share.

MoIT has said that 343.6 million, equivalent to 53.59 percent of Sabeco’s charter capital, will be offered at an initial selling price of 320,000 VND a piece on December 18, as the State looks to reduce its holding from nearly 90 percent to 36 percent.

Meanwhile, DIG’s shares increased over 17 percent last week, trading over 20,000 VND a share, when the Ministry of Construction successfully offloaded its entire holding of nearly 50 percent in the construction corporation.

The investor excitement has spread to other large caps and lifted their prices, including Vinamilk (VNM), up 5.9 percent; Masan Group (MSN), up 6.5 percent; and Hanoi Beer Alcohol and Beverage JSC (BHN), up 7.9 percent.

Banks were also on the winning side with most stocks gaining value. Sai Gon-Hanoi Bank (SHB) and Asia Commercial Bank (ACB) on the Hanoi Stock Exchange posted weekly rises of 13.3 percent and 3.2 percent, respectively.

The value of Military Bank (MBB), Sacombank (STB), VPBank (VPB), Vietinbank (CTG), Vietcombank (VCB) and BIDV (BID) shares on the HCM Stock Exchange increased by between 1-4.8 percent.

Shares of the two biggest oil and gas companies, PV Gas (GAS) and Petrolimex (PLX), rallied 2 percent and 8.3 percent, respectively, thanks to positive developments in the global oil market.

“Cash inflows alternately running into different blue chips of different groups have backed up VN-Index, minimising the chance of tumbles,” said Tran Hai Yen, a stock analyst with Bao Viet Securities JSC.

In a note last week, Yen said money may keep pouring into large caps early this week and this will have positive influence on mid-cap and penny stocks, though this effect may be short-lived.

Thien Bui, senior analyst at Viet Dragon Securities JSC, agreed that strong capital inflows are supporting the market. Many large caps faced corrections but other shares have moved up and pulled the market.

“It implies that investors are very active in this period. However, there might be a risk, as we do not know whether the current capital is financed by (a lot of) margin lending or not. If it is, the capital will be very fragile in the context of a highly volatile VN-Index,” Bui wrote in a report.

Liquidity was high last week with an average of nearly 315 million shares worth 7.3 trillion VND being traded in the two markets per session.

However, according to Duong Van Chung, head of MB Securities Co’s northern branch, the market this year has been very bullish, drawing not only big foreign capital but a great proportion of available money from residents into stocks.

“Thus, the market is longer dependent heavily on margin lending,” Chung was quoted as saying on tinnhanhchungkhoan.vn.

Foreign traders were net buyers of stocks worth nearly 11.3 trillion VND (495.6 million USD) in November, lifting the 11-month net buy value to 25.7 trillion VND, the highest ever recorded, according to Bao Viet Securities.

The record was motivated by divestment in State-owned enterprises and the outlook for an upgrade of Vietnam’s stock market. Strong buys by foreign investors are expected to continue provide momentum for the VN-Index rally.-VNA