VN-Index Close Flat on Inflation Concerns

Ho Chi Minh Stock Exchange’s (HoSE) VN-Index ended October 15 at 458.39 points, 0.06 per cent or 0.27 point lower than previous trading session, with around 25.25 million shares valued at VND705 billion ($36.2 million) changed hands. For the whole week, the VN-Index closed slightly lower from 459.27 points ending the previous week.

Most blue-chips stayed flat or fell slightly on the HoSE today with 149 fell, 66 rose and 45 unchanged. MCG, property developer HAG and fertiliser maker DPM were the most traded stocks today with over one million shares changing hands on HoSE. MCG hit a ceiling price limit at VND18,700, up VND800 a share, the second trading session the share hit ceiling.

Hanoi Stock Exchange’s  (HNX) HNX-Index closed this week at 119.69 points, shedding 0.63 per cent or 0.76 point against previous trading session, with 16.28 million shares and VND356 billion ($18.3 million) traded. Against the previous week, the HNX-Index fell 2 points.

On the HNX, financial PVX continued to be the most traded stock with over 2.2 million shares traded. Closing October 15, PVX fell VND200 a share to VND21,900 each. 189 stocks fell, 80 rose and 75 unchanged on HNX.

Analysts said that the market was gloomy this week as investors waited on sidelines with cautious outlook as the market lacked supportive news amidst rising concerns over higher inflation by the year-end.

Local financial media website NDHMoney predicted oSE

Vietnam’s consumer price index (CPI) to rise by between 0.7 per cent and 0.8 per cent on-month in October this year from 1.31 per cent on-month rise in September, the highest monthly increase since 1995.

Several firms began to release third quarter’s earning reports without positive or better than expected results while some reported losses.

Foreign investors bought over 4.6 million shares today but failed to lift the index. They bought heavily DPM, insurance BVH, HAG, property developer KBC, PET, power firm PPC, financial PVF and infrastructure ITA.

Regarding the monetary policy, although the government has made remarkable efforts in reducing the deposit interest rate and lending interest rate levels, there have been no positive changes. The overheat rises in gold price with no signs of corrections caused hesitations among investors in making investment decisions.

“We are not quite confident about market movements at present when domestic investors are still indifferent of market movements and there have been no positive changes in the monetary market,” said Bao Viet Securities analysts.

Prime Minister Nguyen Tan Dung recently issued an instruction to guide the State Bank to study policy which would allow commercial banks to quickly withdraw money out of circulation to reduce risks of higher price pressures by year-end, triggering concerns that there would be shock measures ahead.

Pham Linh, general director of Vietnam Industry Securities (VIS) said that the prime ministerial instruction was positive, not negative to market, as it was necessary to stabilise enterprises and consumers’ fear of high inflation that relevant authorities would do suitable things to protect them.

“Besides the instruction also limits speculating money to gold and property to fight high inflation,” said Linh, adding that macro economic stability would also benefit from that instruction.

Linh added that the domestic stock valuations have been priced into banks’ recent move to mobilise capital to raise capital minimum capital adequacy ratio (CAR) to 9 per cent by October 1, from previous 8 per cent. By year-end, money market would also not see major change.

“Therefore, the stock market would not be negatively impacted by year-end,” said Linh.