VietNamNet Bridge - Last week's stock market trades were the first to take place since Circular No 74 took effect on August 1, allowing investors to buy and sell the same shares within a single session.

"The circular will help prevent market manipulation and market collapse, since the ability of investors, banks and securities firms to control risks remained restricted," said Hoa Binh Securities Co analyst Nguyen Phuc Thinh.

"But it will be easier for investors to buy shares which they expect an immediate rise in prices, with the opportunity to take advantage of the rise to realise gains."

The State Securities Commission, however, had also issued a guiding document concerning provisions of Circular No 74 which had done more to confuse investors than to clarify the regulation, Thinh said.

"After the VN-Index exceeded 500 points in March, Viet Nam's stock market has so far seen the greatest decline in the region," said the director of the Informatics and Applied Economics Research Institute, Dinh The Hien, in a meeting on Saturday. "Supportive factors did not appear in June and July, so the market was unable to attract investors. However, the economy is gradually stabilising compared to previous months."

"We believe that the commitments of the new Government will help the economy improve in the last months of the year," said the Au Viet Securities Co analysts.

Nevertheless, the Ministry of Finance's pricing department, in its report on market prices in July and its forecast for August, predicted that the prices of many essential consumer goods would rise this month, including petroleum. The agency also forecast inflation in August would continue to increase at a monthly rate of about 1 per cent.

Meanwhile, the VN-Index last week closed down at 400.88 points on Friday, a decline of nearly 1.2 per cent compared to the previous week's session despite advancing sessions on Thursday and Friday.

"Investors were negatively affected by the decline on the US stock market," wrote Au Viet Securities Co analysts in a report.

The average daily value of trades on the HCM City Stock Exchange reached VND741.8 billion (US$36 million), about twice the previous week's level, on an average daily volume of 41.7 million shares. Thursday's session helped drive up the overall averages for the week, with the value of trades climbing to VND1.8 trillion ($87.4 million) for that day.

"Thursday's session saw short-term speculation taking place in a number of codes," said Thinh. "The volume of exchanged shares increased, following the big movements in prices as demand met supply."

With shares nearing an historic low in value, technical factors also supported a rebound, Thinh said.

Many shares saw heavy trading through the negotiation method during last week, including Sacombank (STB) which saw 83.2 million shares traded by this method. On Thursday alone, nearly 75 million STB shares were sold, purportedly due to the Dragon Capital fund's divestment of its stake in Sacombank.

Declines in the shares of insurer Bao Viet Holdings (BVH) and real estate developer Vincom (VIC) pulled the overall value of the insurance and real estate sectors down 5.97 and 5.58 per cent, respectively.

Heavy profit-taking on Friday also drove the HNX-Index down to a cumulative loss of 1.45 per cent on the week and a close on Friday of 68.54 points. The average daily value on the Ha Noi Stock Exchange jumped by 32 per cent over the previous week, however, to VND258.8 billion ($12.6 million), with an average of 27.2 million shares traded per session.

Foreign investors were net sellers on both exchanges, picking a combined net of VND230.4 billion ($11.2 million).

Hien predicted that, this quarter, the VN-Index would continue to range between 400 and 420 points.

"In September, although share prices will not gain much, long-term investment opportunities will crop up," said Hien. "If, at the end of the fourth quarter, signals of lower interest ratea and inflation become clearer, the VN-Index may rise in the short term, reaching 500 points."

Source: VNS