Regulators plan new VN30 index

January 09, 2012 | 17:12
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The HCM Stock Exchange issued detailed guidelines late last week for a new benchmark index – the 30 VN – and a committee was formed to govern the index.

Thirty stocks will be put in an official "basket" to calcuate the 30 VN after undergoing a three-step test of market capitalisation, a free-float ratio of above 5 percent, and substantial trading volume. The committee will reassess semi-annually the stocks included in the basket.

Rumours also hit the market last week that securities regulators were considering eliminating the transaction settlement period, allowing shares to be churned on the same day they were acquired. However, the head of the State Securities Commission's market development division, Nguyen Son, denied the rumours.

Negative information about brokerages continued to appear last week, with the operations of SME Securities Co once again suspended for one month, after the Hanoi Stock Exchange reported that the firm was unable to cover its transactions. Truong Son Securities Co also announced last week that it would halt its brokerage and depository operations.

After levelling out during the previous week, the nation's stock market collapsed again last week. The VN-Index lost 4.2 per cent from the previous last week's close while the HNX-Index dropped by 5.6 per cent.

On the HCM Stock Exchange, the VN-Index concluded a four-session trading week at just 336.73 points. The value of trades averaged VND347.5 billion ($16.5 million), a plunge of 53.5 per cent from the previous week.

Meanwhile, on the Hanoi Stock Exchange, the HNX-Index closed on January 6 at 55.43 points, while the average value of trades per session reached only VND158 billion ($7.5 million), a drop of nearly 41.5 per cent.

Lower market values were common as the Tet (Lunar New Year) holiday approached, said Kim Eng Securities Co analyst Phan Dung Khanh.

"Therefore, besides market risks of falling share prices, investors should consider liquidity risks for the stocks they are holding," said Khanh

"Two stocks which actually outperform the overall market are food processors Long An Food (LAF) and Societe De Bourbon Tay Ninh (SBT)," he said, noting that both shares, although closing unchanged on the same day, had been rising for nearly two months.

Meanwhile, PetroVietnam Finance (PVF) is expected to fall further. "This shows the great difference between the manufacturing and financial sectors," Khanh said. If long- and short-sell methods are applied, strategic transactions are possible, as used by hedge funds in more advanced markets, he added.

The level of cash flow into the securities market this week will be heavily dependent on financial policies, said FPT Securities Co analyst Nguyen Van Quy. "However, the risk of inflation returning ahead of the Lunar New Year holiday has reduced any likelihood that interest rates will be cut," Quy said.


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