Adding fuel to the fire

The Ministry of Finance (MoF) approved a rise in retail gasoline prices by 2.97-11.9 per cent yesterday afternoon. The move even exceeded analysts’ previous expectations, sparking fears about a return of high inflation.

“Vietnam’s economy is facing a critical point, where inflation risks are high and demand for lowering lending rate is even higher,” said Saigon Securities Inc. (SSI) in a note to clients today. “Market participants have been well aware of this price hike for petroleum products, but short term effect is still negative as those products are the most sensitive to the public.”

That move concerned investors, while the market corrected after a long rising tide. Offering shares at low prices were largely from the session’s start, with selling pressures increasing until the end of the session. Demand for shares weakened.

The VN-Index of Ho Chi Minh Stock Exchange (HoSE) tumbled 12.36 points or 2.78 per cent to close at 431.66 points. Some 220 stocks ended lower, compared with just 61 advancing and 27 unchanged.

Leading major stocks massively hit the ceiling, mainly financial shares Saigon Securities Inc. (SSI), PetroVietnam Finance (PVF), Sacombank (STB), Eximbank (EIB), Vietcombank (VCB) and Vietinbank (CTG).

The HNX-Index sunk even more strongly, falling 3.2 points or 4.26 per cent to 71.83 points. Some 235 stocks declined with 56 hitting the floor on the bourse, while 64 up and 40 unchanged.

Most leading stocks on the HNX were strongly sold out, with Asia Commercial Bank (ACB), Bao Viet Securities (BVS), VNDirect Securities (VND) and PetroVietnam Construction (PVX) falling the most.
Liquidity reached 90 million shares worth VND1.57 trillion ($75.8 million) on the HoSE, hitting 95 million shares worth VND907 billion ($43.8 million) on the HNX.

Matching volumes of banking shares kept high. Military Bank (MBB) had 9.2 million shares matched, HBB saw 13.3 million shares matched.