Stocks remain in free fall, but volumes up

Saturday, May 17, 2008
Ho Chi Minh City stocks closed the week Friday with yet another dismal day of trading after see-sawing for a while between positive and negative territories.
Panic selling at the opening caused the VN-Index of 154 listed companies to extend the weeklong fall.
But the trading volume rose in the first session to nearly 2.8 million shares, or equal to full-day volumes in recent days, as traders seemed to believe the market had bottomed out.
The high volumes helped the index regain ground somewhat in the next session, but heavy selling in the third and final session saw the VN-Index finally close at 460.04 points, or 6.63 points down.
The total trading volume topped eight million as 130 stocks lost.
Analyst Huy Nam told Thanh Nien that the recent narrowing of the daily trading band from 5% to 2% by the State Securities Commission (SSC) was the key factor behind the market’s fall.
“The cut prompted a huge investor withdrawal and drained the market of liquidity,” he said, suggesting the band should be widened again.
The band was narrowed to 1% on March 27 to halt a relentless slump in share prices.
The market regulator then increased it to 2% on the Ho Chi Minh Stock Exchange and 3% on the Hanoi Securities Trading Center on April 7.
A HCMC-based analyst, who wanted to remain unnamed, however, disagreed with Nam, saying the market had nosedived along with investor confidence.
He suggested that the regulator should calm investors’ panic by delaying imposition of capital gains tax or reducing brokers’ commission.
Foreigners still buying
As prices continued to fall, foreign investors continued to buy, pumping in VND26 billion ($1.6 million).
PetroVietnam Fertilizer and Chemicals, PetroVietnam Drilling and Well Services, Hoa Phat Group, dairy firm Vinamilk and Tan Tao Industrial Zone were among their favorite stocks.
The Hanoi market too continued to lose, with the HASTC-Index dropping 2.35 points, or 1.65%, to close at 139.74.
Of the 135 stocks listed on the market, 109 fell and just 14 rose.
Liquidity was partially restored as more than 4.4 million shares, four times the average volume in recent days, were traded.