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Market could fall further before rebounding: analyst   2008-09-15 - ThanhNien

Vietnam’s major stock market in Ho Chi Minh City last week plunged to a three-month low as the VN-Index surrendered 70.66 points, or 12.9 percent, to close at 476.



“Many investors sold heavily to take profits from earlier rallies,” said Le Van Thanh Long, director of An Phuc Investment. “But the selling was too heavy, making the market struggle to hold up at 500 points.”

Eight stocks escaping the carnage were food maker Sa Giang (SGC), hydropower Ry Ninh II (RHC) and its counterpart Can Don (SJD), paint producer Dong Nai (SDN), seafood makers Ben Tre (FBT) and Incomfish (ICF), sugar manufacturer Bourbon Tay Ninh (SBT) and construction material supplier Da Nang (DXV). The eight best movers were all small caps, with share prices remaining low, from VND12,100 to VND24,600.

Responding to a Thanh Nien Daily query about the possibility of a rebound this week, Long expected “the market struggle to rally.”

He said many institutional investors, who bought shares when the benchmark index remained above 500 points, would wait for the market to fall further to buy at lower prices.

“The market might fall to 450 points early this week before bouncing back to around 480,” Long predicted.

Sacombank and technology giant FPT Corp. tumbled soon after the opening bell last Monday as a Thanh Nien Daily article forecast early last week.

Sacombank, the exchange’s lone listed lender, lost everyday last week, plunging 18.21 percent to close at VND25,600 last Friday, while FPT Corp. plummeted 21.26 percent to finish at VND100,000.

The losses taken by two of the marketplace’s key drivers made investors nervous. Therefore, other large caps – such as telecommunications material supplier Sacom (SAM), brokerage SSI (SSI), electrical appliance maker REE (REE), petroleum transport firm PV Trans (PVT), Vinh Son Hydropower (VSH) and industrial zone operator Tan Tao (ITA) – were also sold heavily.

Of the index’s 162 members, 151 lost and a mere three remain unchanged last week.

And they came tumbling after The Hanoi Securities Trading Center had a gloomy last week as well, with the HASTC-Index dropping 15 percent to close at 160.62 points last Friday.

The tumbling of Asia Commercial Bank (ACB) and construction giant Vinaconex (VCG), the market’s two key drivers, had many investors running scared.

Vinaconex, which just made its debut on September 5 at VND39,800, slumped everyday last week, losing 25.37 percent to close at VND29,700 last Friday.

“Investors overvalued VCG, trading the stock at VND35,000-VND40,000 on the informal over-the-counter market before it was floated on the Hanoi stock exchange,” Long said. “So the share price was adjusted to a suitable level when the stock was listed on the exchange.”

Figures from the exchange showed foreign investors sold more than 1.2 million shares in Vinaconex while buying a mere 26,500 over the last six trading days.

“Its weak management of a bulky operation [managing more than 40 subsidiaries] and lack of financial information sees Vinaconex struggle to attract investors,” Long said. “I expect investors will come back to buy the stock when its share price falls to VND20,000 or so.”

Asia Commercial Bank, the exchange’s only listed lender was dipped in red four days last week. “ACB lost ground because investors booked profits,” Long said. “The stock had surged earlier, moving up from VND42,300 on June 20 to VND87,700 last Wednesday.”

“If the demand for shares in the marketplace remains high, ACB will rally at the end of this week,” Long said.

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