Shares cringe from high rates

HA NOI — Prices on both of Viet Nam's stock exchanges fell immediately after it became known yesterday morning that some commercial banks were offering up to 14 per cent for yearly dong deposits.

An agreed limit of 12 per cent had been set just last Friday.

The two per cent-rise has sparked speculation that interest for loans will now go to a yearly 16-20 per cent to offset the high rate paid to savers.

In HCM City, the VN-Index declined more than 1 per cent to close at 446.69.

Just 25.2 million shares worth almost VND568.7 billion (US$28.4 million) were exchanged.

Decliners outnumbered advancers 196-30, of which up to 36 shares dropped to the floor price.

Most blue chips tumbled.

Masan Group (MSN) fell 3.2 per cent; Phu My Fertiliser (DPM) and Hoa Phat Group (HPG) 2.3 per cent; software FPT Corp (FPT) 2 per cent; Ocean Group (OGC) 1.6 per cent; and Eximbank (EIB) 1.4 per cent.

Of the 10 largest capitalised shares, insurer Bao Viet Holding (BVH) up 0.8 per cent, Vietinbank (CTG) 0.5 per cent and property developer Vincom (VIC) 1.4 per cent were among few shares that rose.

Sai Gon Securities Inc (SSI) – the only listing to have more than 1 million shares exchanged – was the most active stock but fell 0.8 per cent to close at just VND23,900.

Critical point

"Companies are at critical point," said independent analyst Nguyen Viet Hung.

"They are attempting to accomplish their business targets by year's end, but high lending cost is presenting them with a great challenge."

The analyst said that as the stock market continued its decline, many investors had turned to gold, foreign currencies and even bank deposits to maintain their returns.

But SJC Securities Co general director Huynh Anh Tuan argued that tighter monetary policy did not directly affect the stock market because only a few investors were borrowing money to buy shares.

"Gold and the greenback continue to affect the stock market," he told the financial information web site Cafef.vn.

Although the State Bank of Viet Nam's approval of more gold imports had driven the price of the precious metal down, the amount of dollars the central bank would pump into the economy was still unknown.

The uncertainty unsettled investors who turned elsewhere to speculate.

"Long-term, if the exchange rate is stable and inflation in check, ‘hot money' could arrive in Viet Nam and blow the stock market out of the doldrums," said Tuan.

In Ha Noi, the HNX-Index lost 2.23 per cent of its value to close at 104.79; losers outnumbered gainers more than five to one.

But market volume rose 15 per cent to 26 million shares worth more than VND463.1 billion ($23.1 million).

Property developer Sacomreal (SCR) dropped to its floor price for the second day since it listed its shares three days ago. It closed at VND23,700 per share with 1.76 million changing hands – the second most active trading on the northern bourse.

PetroVietnam Construction (PVX) continued to be the most heavily-traded shares nationwide, with 2.15 million shares exchanged.

PVX closed off 1.4 per cent at VND20,600.

Foreign investors remained to be net buyers on the two exchanges, picking up VND67 billion ($3.3 million) worth of shares.

Source: vnagency.com.vn