Stock market to remain jittery: analysts

Monday, May 12, 2008
Analysts see no sunshine for the benchmark stock market in the week ahead, after stocks on the Ho Chi Minh City index experienced another gloomy week.

“Sentiment was hurt last week as there was bad news about the country’s economy,” said analysts from FPT Securities, who asked not to be named.

“We think the VN-Index will extend its losing run next week.”

In the same week Vietnam’s credit rating was downgraded by an international ratings agency, analysts raised expectation of more economic pain ahead, with record oil prices expected to increase inflationary pressure.

Last week the Ho Chi Minh Stock Exchange VN-Index of 154 listed companies fell every day, losing 4% to close at 500.33.

The benchmark index, which has dropped more than 46% this year, remains the world’s worst performing stock market in 2008.

The VN-Index began the week with a slight drop on Monday, slumping more as the week progressed.

On the first three trading days of the week, stocks in the inflation-defensive sectors of food, medicine and construction materials performed well, while shares of finance and property companies declined by the daily limit of 2 percent.

All stocks dipped into the red on Thursday and Friday as investors lost further confidence.

The average volume in terms of shares traded this week accounted for nearly 5.2 million a day, half of previous week’s average of 9.6 million.

Standard & Poor’s downgraded Vietnam’s credit rating outlook to negative on May 3, blaming the overheating economy.

The rating company affirmed the country’s BB long-term foreign currency rating, which is two levels below investment grade and one rating above those given to the Philippines and Indonesia.

“Hectic investment activity in recent years appears to have pushed the economy to the limits of its capacity,” S&P said in a statement.

Ever-increasing oil prices mean the domestic fuel price are likely to increase in June, when the government’s price freeze is lifted.

The looming gasoline price hike has intensified fears inflation will leap again, after rising 21.4% year-on-year in April, the highest rate in 16 years. (TN)