Market liquidity soars as investors roll up sleeves

The country’s main bourse, the Ho Chi Minh Stock Exchange (HoSE), saw its liquidity soar last week to a nine-month high with 70 million shares worth VND1,300 billion ($62.8 million) a session.

Closing last week, its market liquidity soared up to 455 per cent, against only 15.5 million shares worth VND230 billion ($11 million) on August 15, the day the market bottomed out at 384.32 points.

Statistics show that market liquidity on the HoSE and Hanoi Stock Exchange (HNX) reached VND4,039 billion during August 12-19, VND4,576 billion during August 22-26 and VND5,627 billion during August 27 to September 1.

HoSE’s VN-Index has rallied 22 per cent since August 15, among the biggest rises in a month.

“I think the money mainly came from sharks [big institutional players] as retail investors still kept a cautious view,” Tri Viet Securities chief analyst Duong Hong Ha told VIR. 

A Ho Chi Minh City Securities Corporation (HSC) analyst said money flows into the stock markets were increasing after the State Bank had tried to lower rates and pump more money via different channels to support banks’ liquidity.

“We believe speculative money flows will find equities for the time being,” said Tran Minh Hoang, a Vietcombank Securities senior analyst.

There were also rumours that savers were getting money back from banks to invest in stocks as they were offering better rewards after the State Bank had strengthened its supervision on banks’  capped deposit rates of 14 per cent annually.

“Therefore, savers will put their money into other investment channels,” said Nguyen Tri Hieu, a bank analyst.

Quach Manh Hao, deputy CEO with Thang Long Securities, said investors were putting their money back into trading accounts at brokerages.

“The reason might be that investors see equities more attractive than savings or gold. That would mean an increase in  stock market liquidity,” said Hao.

The stock market has been bearish due to macro instability, in which inflation pressures and a credit crunch played key roles.

In a related development, National Committee for Financial Supervision (NCFS) deputy chairman Le Xuan Nghia said a group of nine leading foreign institutional investors from the US, European and Japan had arrived in Vietnam to secure business opportunities.

“Smart foreign investors were considering cheap Vietnam valuations good opportunities,” said Quan Duc Hoang, Alternative Investment Capital chairman.