November’s uptrend in Viet Nam’s stock market could extend on the back of strong capital inflows from both domestic and foreign investors, analysts say.

The VN-Index of the HCM Stock Exchange rose 2.65 per cent last week, concluding Friday at 960.33 points, the highest since December 7, 2007.

Viet Nam’s key market index gained nearly 13.5 per cent in the past one month and has climbed 44.5 per cent since the beginning of this year.

In north, the HNX-Index rose 4.2 per cent last week, closing Friday at 115.49 points. The northern market index has also expanded over 44 per cent this year.

The Ministry of Industry and Trade (MoIT)’s announcement on the long-awaited competitive share offering of Sai Gon Beer-Alcohol-Beverage Corporation, better known as Sabeco (SAB), and the Development Investment Construction Joint Stock Company (DIG) has spurred investors’ interest in the stock market.

SAB was also among the biggest gainers with a weekly gain of 3.5 per cent given that it is the most expensive stock in the market, at VND330,000 (US$14.47) per share.

MoIT has said that 343.6 million, equivalent to 53.59 per cent of Sabeco’s charter capital, will be offered at an initial selling price of VND320,000 a piece on December 18, as the State looks to reduce its holding from nearly 90 per cent to 36 per cent.

Meanwhile, DIG’s shares increased over 17 per cent last week, trading over VND20,000 a share, when the Ministry of Construction successfully offloaded its entire holding of nearly 50 per cent in the construction corporation.

The investor excitement has spread to other large caps and lifted their prices, including Vinamilk (VNM), up 5.9 per cent; Masan Group (MSN), up 6.5 per cent; and Ha Noi Beer Alcohol and Beverage JSC (BHN), up 7.9 per cent.

Banks were also on the winning side with most stocks gaining value. Sai Gon-Ha Noi Bank (SHB) and Asia Commercial Bank (ACB) on the Ha Noi Stock Exchange posted weekly rises of 13.3 per cent and 3.2 per cent, respectively.

The value of Military Bank (MBB), Sacombank (STB), VPBank (VPB), Vietinbank (CTG), Vietcombank (VCB) and BIDV (BID) shares on the HCM Stock Exchange increased by between 1-4.8 per cent.

Shares of the two biggest oil and gas companies, PV Gas (GAS) and Petrolimex (PLX), rallied 2 per cent and 8.3 per cent, respectively, thanks to positive developments in the global oil market.

“Cash inflows alternately running into different blue chips of different groups have backed up VN-Index, minimising the chance of tumbles,” said Tran Hai Yen, a stock analyst with Bao Viet Securities JSC.

In a note last week, Yen said money may keep pouring into large caps early this week and this will have positive influence on mid-cap and penny stocks, though this effect may be short-lived.

Thien Bui, senior analyst at Viet Dragon Securities JSC, agreed that strong capital inflows are supporting the market. Many large caps faced corrections but other shares have moved up and pulled the market.

“It implies that investors are very active in this period. However, there might be a risk, as we do not know whether the current capital is financed by (a lot of) margin lending or not. If it is, the capital will be very fragile in the context of a highly volatile VN-Index,” Bui wrote in a report.

Liquidity was high last week with an average of nearly 315 million shares worth VND7.3 trillion being traded in the two markets per session.

However, according to Duong Van Chung, head of MB Securities Co’s northern branch, the market this year has been very bullish, drawing not only big foreign capital but a great proportion of available money from residents into stocks.

“Thus, the market is longer dependent heavily on margin lending,” Chung was quoted as saying on tinnhanhchungkhoan.vn.

Foreign traders were net buyers of stocks worth nearly VND11.3 trillion ($495.6 million) in November, lifting the 11-month net buy value to VND25.7 trillion, the highest ever recorded, according to Bao Viet Securities.

The record was motivated by divestment in State-owned enterprises and the outlook for an upgrade of Viet Nam’s stock market. Strong buys by foreign investors are expected to continue provide momentum for the VN-Index rally. — VNS