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Data leaves markets uncertain   2010-10-04 - Viet Nam News

The nation’s stock exchanges reacted weakly to last week’s economic data showing a healthy growth in GDP in September as well as the announcement from the State Bank of Viet Nam (SBV) easing the impacts of Circular No 13 on commercial banks.

On the HCM City Stock Exchange, the VN-Index managed only a modest increase of just 0.44 per cent over the course of last week, ending Friday’s session at 451.71. Both volumes and values of trades declined by around 21 per cent, to an average of 37.2 million shares per session worth an average of VND1 trillion (US$51.3 million).

Ocean Group (OGC) continued as HCM City’s most-active share, with an average of over 1.6 million shares traded per session, while insurer Bao Viet Holdings (BVH) posted the largest gains among the 262 listed companies, picking up nearly 15 per cent in value during the week.

On the Ha Noi Stock Exchange, meanwhile, the HNX-Index slid 2.95 per cent from the previous week’s close to end Friday’s trading at 125.81 points. Daily market value also dropped by 19 per cent to VND724.8 billion ($37.2 million) on a volume of more than 28.4 million shares exchanged per day.

PetroVietnam Construction (PVX) was the most heavily traded share nationwide on a volume of nearly 3 million units per day, but Viet-Duc Welding & Electrode (QHD) led the market with cumulative gains of over 26 per cent.

Early last week, the SBV issued Circular No 19 to supplement the controversial Circular No 13. The latter’s high risk requirements were retained, but Circular No 19 sought to soften the blow by easing restrictions on funds available for lending and meeting capital ratio requirements.

Ho Ba Tinh, analyst with financial information provider Vietstock, said in a weekly report that the results of the Circular No 13 review did not meet investor expectations, causing investors to remain skeptical about market development.

"Investors are likely to wait and observe the impacts of the circular after it takes effect," Tinh said.

A new draft regulation of the securities market being prepared by the Ministry of Finance has also made investors uneasy, he added.

The draft would require all transactions in excess of VND200 million ($10,250) per session executed by individuals, and those in excess of VND500 million ($25,640) executed by institutions, to be reported to the ministry.

The deputy head of the Central Institute for Economic Management, Vo Tri Thanh, said while GDP grew by 7.16 per cent in the third quarter, the economy was still under pressure from rising inflation, a high trade deficit, and fluctuations on gold and forex markets.

Rising inflationary pressures were creating inconsistency in financial and monetary policies and encouraging speculation, Thanh said, while the rising trade deficit was putting pressure on exchange rate policies.

"Policy risks are holding back investment in the stock market," he stressed.

FPT Securities Co analyst Nguyen Van Quy agreed that spikes in the value of gold and the US dollar had affected the stock market as some investors shifted short-term investments away from securities and into to gold.

Domestic gold prices last week hit a record of over VND31.3 million ($1,605) per tael (a tael is equivalent to 1.2 troy ounces), while a US dollar was only able to buy VND19,700 on the streets.

Quy said that third-quarter earnings could be the only major factor influencing stock trading this week in the lack of further new economic information.

Last week, foreign investors continued to demonstrate their confidence in prospects of the domestic securities market, responsible for net buys of 7.7 million shares worth a combined VND329.5 billion ($67.9 million). The value of their net buys topped VND1.17 trillion ($60.4 million) in September, an increase of 37.5 over the previous month.

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