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Unclear trends, Circular 13 darken investor sentiment   2010-09-27 - Viet Nam News

Stock indices declined last week on both national exchanges as investors remained wary of unknown variables, such as inflationary trends and the results of the State Bank of Viet Nam’s review of controversial Circular No 13.

On the HCM City Stock Exchange, the VN-Index lost 1.7 per cent of its value from the previous week’s close to end Friday’s session at 449.71. The value of trades increased by 20 per cent, however, averaging VND1.8 trillion (US$65.7 million) per session, on an average volume of 46.7 million shares.

Ocean Group became the most active stock nationwide last week with an average of 6.1 million shares changing hands daily, thanks to a record volume of over 14.3 million shares on Tuesday. However, OGC shares ended the week off by 9 per cent from the previous week’s close to VND33,400 ($1.70) per share.

In Ha Noi, the HNX-Index also slid over the course of the week by 2.4 per cent to 129.63 points. The average value of trades rose by over 5 per cent, however, to VND894.6 billion ($45.9 million) on a volume of over 36.5 million shares per session.

PetroVietnam Construction (PVX) continued as the most-active share on the Ha Noi market with over 4.4 million shares changing hands daily. Nevertheless, PVX close Friday at VND23,400 ($1.20), a decline of 2.5 per cent from the previous week.

Foreign investors were net buyers again on both bourses last week, picking up a a combined net of VND256 billion ($13.1 million) worth of shares. OGC was their most favoured share, with trades worth VND107 billion ($5.5 million), accounting for 45 per cent of foreign buys.

Market declines last week mirrored persisting investor worries over the impacts of high inflation and Circular No 13 – which would impose stricter capital adequacy requirements on banks – said Nguyen Quang Minh, an analyst with the online financial information website Vietstock, in a weekly report on Friday.

"There is one week left until Circular No 13 takes effect, but the expected results of the review have not yet been officially announced," Minh wrote. "The lack of supporting information depressed investor psychology, the main reason for last week’s decline," Minh wrote.

Inflation in September soared by a dramatic 1.31 per cent over August – an annualised rate of 15.7 per cent and a rate three times higher what had been forecast by Market Watch officials. While the figure was not formally released until early Friday afternoon, rumours that the announced figure would be high had an impact on some investors.

FPT Securities Co analyst Le Thi Bich Hang said investors would have two days to digest the news and would not react in an extreme manner when the market opened today.

Disbursements of foreign investment were also announced at the end of the week to have surpassed $8 billion during the first nine months of this year – an increase of 4.8 per cent year-on-year and news likely to have a positive impact on trades today.

The trade deficit reached $8.6 billion in September, its highest level in five months, Minh noted, and this and other economic data to be released this week – including growth, credit expansion and budget deficit figures – were certain to have a further impact on the market.

Credit grew by just 16.5 per cent during the first eight months of the year, and concerns remain that Circular No 13 will further restrict credit expansion. Vo Tri Thanh, deputy head of the Central Institute for Economic Management, opined, however, that the circular would not have as negative effect as investors feared, predicting that credit would continue to expand toward the year’s target of 25-per-cent growth.

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