VietNamNet Bridge – Shares saw modest gains on the HCM City Stock Exchange last week, with the VN-Index ending Friday's session at 383.80 points, an increase of 1.58 per cent over the previous week's close.

The volume of trades during the week rose 19.5 per cent to a total of over 158 million shares, but the overall value of trades declined by nearly 43 per cent to VND1.86 trillion (US$88.5 million).

The index flirted with its resistance level of 378 points, which hinted that it might not be able to reverse its downtrend. On the Ha Noi Stock Exchange, the HNX-Index gave similar signals, with trading values and volumes falling during the last few sessions last week.

Nevertheless, the HNX-Index managed to add 1.2 per cent over the previous Friday's close, reaching 51.66 points by Friday's closing bell. The total value of trades on the northern bourse during the week rose 56.6 per cent to VND762.5 billion ($36.3 million), while volume soared 70.3 per cent to 134.7 million shares. Helping buoy share values, HSBC released data last week showing Viet Nam's Purchasing Managers Index in November had hit 50.5 points, the first time in 14 months the index exceeded an average value of 50 points.

JPMorgan Chase also said that the nation's inflation rate of 7.1 per cent in the first 11 months of the year was positive and predicted an inflation rate for the whole year of around 7.5 per cent, a considerable improvement over the 8-9 per cent previously forecast. The bank also predicted that Viet Nam's economic growth next year could reach about 5.6 per cent, bettering this year's expected growth of 5.2 per cent.

The banking system's bad debt levels remained the biggest challenge to growth. While the State Bank of Viet Nam has reported a bad debt ratio of 9 per cent, most credit rating agencies estimated the number at closer to 12 per cent.

"The measure of reducing interest rates, if implemented this month, will not be enough to promote credit growth or increase capital among enterprises," commented VietDragon Securities Co analysts in a note.

It was difficult to expect a strong rally of the indices at the end of this year, they said, although they predicted a short recovery.

"Market sentiment may become more positive thanks to better economic growth along with investment funds revaluating their portfolios."

PetroVietnam Securities Co analyst Dao Hong Duong said, "Investors should not sell off and should avoid being influenced by short-term fluctuations."

Data from Thomson Reuters showed that the Vietnamese stock market attracted a net value of $66 million from foreign investors in November. Foreign transactions mainly occurred at the HCM City Stock Exchange, where foreign investor buys totalled VND1.38 trillion ($65.7 million). Shares of real estate developer Vingroup (VIC) alone reached over VND1 trillion ($47.6 million), accounting for 75 per cent of this net value.

"This indicates that foreign net buys last month did not have much impact on the market and have not reflected a trend in foreign investment," Duong said.

Foreign investors gave the primary boost to the market during some trading sessions last week, however, as exchange-traded funds began revising their portfolios.

Minister of Finance Vuong Dinh Hue also called for an increase in the ownership limits on foreign investors in listed Vietnamese enterprises.

Foreign investors were net buyers in HCM City last week by a margin of VND48.7 billion ($2.3 million). They mainly bought shares of food processor Masan (MSN), with net buys totalling VND22.5 billion ($1.07 million), followed by Vietcombank (VCB) at VND21 billion ($1 million), Military Bank (MBB) at VND15.5 billion ($738,000) and steelmaker Hoa Phat (HPG) at VND8.6 billion ($409,500).

Foreign investors continued as net sellers in Ha Noi by a margin of VND9.5 billion ($452,400).

Source: VNS