VINACHEM

HA NOI — Viet Nam's stock market declined again this week with the VN-Index on the HCM Stock Exchange dropping 0.83 per cent over the course of last week to end Friday at 411.03 points, while the HNX-Index trod water to finish the week at 69.13 points on the Ha Noi Stock Exchange.

News on low inflation rates in October in the two major cities of Ha Noi (0.13 per cent) and HCM City (0.19 per cent) was not well received. Up to 16 of a total 24 sectors declined, with banking shares seeing the sharpest drop of 17.4 per cent due to negative information about bank liquidity; followed by real estate and construction sectors each decreasing by over 2 per cent.

Investors remained prudent with their transactions, driving down both market volume and value. Market volume declined to just 13.7 million shares in HCM City on Thursday, the lowest since March 2009, while the trading volume also reached only 17 million shares in Ha Noi.

Daily market volume on the southern bourse fell 18.6 per cent overall compared to the previous week, totalling just 25.2 million shares worth VND433.4 billion (US$20.6 million) per session. Trading volume on the Ha Noi bourse also decreased 15.3 per cent over the previous week's level, averaging just 27.8 million shares worth VND265 billion ($12.6 million) per day.

Trading improved in the last two sessions with many codes rising to the ceiling, but cash flow still focused on hot codes such as Becamex Infrastructure Investment (IJC) and construction Hoang Quan Corp (HQC) in HCM City, and securities companies such as Kim Long (KLS) and VNDirect (VND) in Ha Noi.

Eximbank (EIB) saw the busiest trade last week with over 7.5 million shares, worth more than VND98 billion ($4.7 million), changing hands.

Transactions by foreign investors remained sluggish. They continued to conclude last week as net sellers on both exchanges, unloading a combined VND78 billion ($3.7 million) worth of shares, focusing on shares of property developer Hoang Anh Gia Lai Co (HAG) with a net sell value of VND29 billion ($1.4 million).

Recent developments on the financial markets revealed its continued instability, with the interbank exchange rate climbing 11 times in one month to VND20,748 against the US dollar, and rising interbank rate over the past week which showed continued problems of liquidity among small banks, analyst with a Ha Noi-based financial company Nguyen Viet Vinh wrote in a report.

Data on the national inflation rate in October would be released this week and was forecast to be around 0.4-0.5 per cent due to the negative impacts of recent natural disasters, Vinh said.

"If so, the country's inflation rate in the first 10 months of this year will reach 17.1 per cent against December of last year. This slowdown in inflation is creating a positive signal for reaching the Government's inflation target and helping reduce interest rates in the near future."

Vinh said improving trading in the last two session partly eased investors' concerns on a further downturn but he warned it was still too early to confirm another uptrend.

"Trading volumes and value are now considered the most important indicator to monitor the market trend," he said. "However, it's a fact in Viet Nam's market that supply and demand can unexpectedly change and the market risk remains high." — VNS