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Capital shortage hinders markets   2010-07-26 - Viet Nam News

Friday’s rally couldn’t save the HCM City market from its gloomy week after VN-Index lost 1.17 per cent of its value and closed at 500.31.

The day’s trading volume in the market increased 3.13 per cent during the week, with 41.85 million shares traded. However, market analyst said these numbers reflected the weak performance of capital in the national stock exchanges.

Tran Quang Vinh, a market analyst at FPT Securities, said that markets went sideways for long time [two months], which discouraged investors from injecting additional money into the markets, while a number of stocks from extra issuances and new listings placed a burden on the existing capital.

"In addition, the old habit of day-trading for instant profit, as well as concerns prompted by the uncertainty of global markets, are challenging the markets to break out of the doldrums," he said.

Ngo Van Minh, head of the investment department at a Ha Noi-based fund management firm, said that quality of newly-listed companies as well as the effectiveness of using capital raised through extra issuances were critical.

"Among the 47 newly-listed companies currently, only Ocean Group and Sacombank Securities possess large charter capitals, while the remaining have low market capitalisation," Minh said, noting these two companies had yet selected any foreign partners.

Meanwhile, in order to ensure their profit margins after raising charter capital, market makers have increased their sell-off, which has worked to solidify the market’s bleak forecast, he added.

As a result, the HNX-Index of Ha Noi market lost 160-resistance points, and fell to 157.99 points last Friday. The index lost 1.94 per cent of its value, on the trading volume for the day totalled 42.13 million shares.

Foreign investors remained as the net-buyers in southern market by picking up a volume of 1.1 million shares, while they reinforced their profits in Ha Noi after selling off a net volume of 362,000 shares.

Vinh said that remaining doubts concerning the uncertainty of the global economy would be a reason to re-test the market’s resiliency.

"However, a steep dip is unlikely to occur due to the massive amounts of subsidies that can be utilised in domestic economy. But the markets can remain sideways," he said.

Minh said the positive results from EU banks’ stress tests and low CPI ratio in July would lift traders’ spirits today, which would hopefully stimulate the injection of money into high-portfolio stocks.

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