Market activity dries up

(04-04-2008)

HA NOI — The HCM City stock market yesterday repeated the same story of the past week or so, with trading once again slowing to a trickle in the wake of the move by the State Securities Commission last month to restrict the rise or fall of shares in a single trading session to plus-or-minus 1 per cent.

The VN-Index once again posted nearly the maximum allowable gains on the day, rising 0.78 per cent to close at 529.23.

But trading volume continued anaemic, with only 1.9 million shares traded. Value of the day’s trades totalled only VND95.19 billion (US$5.9 million), of buy orders continuing to match sell orders by a two-to-one margin, a pattern that has been repeated daily for the past week.

Thuan An Wood Processing (GTA) was the only declining share, as the exdate for its dividend payment passed.

In recent days’ trading, major shares like Saigon Securities Inc (SSI) and Sacombank (STB) largely disappeared from top list of most active shares, with the spots now taken by some seasonal penny stocks.

"This proves the exchange has not yet been stabilised," said Bui Duc Thinh, head of analysis for Royal International Securities. "I think the authorities should keep the recent band for a certain period until investors truly recover from a panic mindset."

Foreign investors yesterday continued to be net sellers of 425,900 shares, but Thinh rejected that this was any basis for worrying over a withdrawal of foreign investors from stock market. Overseas funds, he noticed, continue to maintain a positive view of the Vietnamese market.

"Many overseas financial organisations and banks are waiting for permission to establish offices in our countries," he noted. "That alone suggests the attractiveness of our local market."

Nguyen Dinh Phong, an analyst from VNDirect Securities, said, "Long-term traders have not been impacted much by the tighter trading band. They have been staying home from these sessions."

Day traders, meanwhile, were thirsty to buy shares but have unable to find sellers, with the market falling into a nearly frozen state.

"I think that it’s time to loosen the band as trading is weakening and the stock exchange has lost liquidity," Phong said, adding that the loosening should be implemented gradually in order to avoid unexpected behaviour from investors.

Loosening the band

The State Securities Commision seemed to hear the suggestion, deciding yesterday afternoon, following the close of trading, to raise the daily trading band on both the HCM City and Ha Noi bourses by 1 per cent.

Accordingly, the trading band on the HCM City Stock Exchange will become 2 per cent effective on Monday, and that at the Ha Noi Securities Trading Centre will become 3 per cent.

Phong said the news would warm up the next few trading sessions and help level out the market before the band is returned to its prior levels of 5 per cent in HCM City and 10 per cent in Ha Noi.

The Ha Noi market yesterday continued its seventh gaining session with the HASTC-Index closing up 1.40 per cent to 190.32. Trading turnover ended higher than Wednesday’s session, at VND24.79 billion ($1.5 million), on a volume of 489,800 shares, although several codes saw no trading activity in the session. — VNS