Tight band slows trades to a trickle

(03-04-2008)
A couple of investors have the board to themselves at the offices of ACB Securities office in Ha Noi. — VNS Photo Viet Thanh

HA NOI — The VN-Index continued inching up yesterday within the confines of the narrower daily trading band instituted a week ago, gaining 0.79 per cent in yesterday’s session to close at 525.11.

Trading, meanwhile, seemed to be slowing to a trickle under the new market restriction, with turnover in yesterday’s session reaching only VND72 billion (US$4.5 million) on a very meagre volume of only 1.1 million shares.

"Buy orders are outnumbering sell orders, but the sellers just are there," said Hoang Quoc Dung, an investor with Viet Nam International Securities.

According to Bui Van Quang, deputy director of SME Securities, investors were holding onto shares because they didn’t see much profit in trading within the narrow band.

"Accordingly, boredom with trading could become a habit if authorities still continue with the tighter band," Quang said.

Despite fears of the stock market becoming frozen, Ta Thanh Binh, deputy head of market development under State Securities Commission, said, "We will continue the narrow band as we see investors are not yet calm. Once the stock market signals some strength, we will loosen the band."

Foreigners were net sellers yesterday, with 308,790 shares bought and 342,450 shares sold.

"Due to the panic of local investors and the gloomy state of the stock market, these minor shifts in buying and selling by foreign traders creates rumours that foreigners are withdrawing from the stock exchange," said Binh.

"That’s not going to happen."

Rang Dong Light and Vacuum Tube (RAL) was the only decliner in yesterday’s session due to passage of the exdate for its dividend payment. RAL closed down 1.22 per cent to VND40,400.

Viet Nam - Italy Steel (VIS) led the market in trading volume, on only 107,400 shares.

In Ha Noi yesterday, the HASTC-Index closed up 1.78 per cent to 187.69. Trading revenue reached only VND23.45 billion ($1.4 million) on a tiny volume of 433,500 shares. — VNS

Regulators loosen stock market trade band

(04-04-2008)
Securities officials expect investors to return to the stock exchanges following the State Securities Commission’s decision to loosen the daily trading band, effective next Monday. — VNA/VNS Photo Hoang Hai

HA NOI — Facing the prospect of a stock market nearly grinding to a halt over the past week, the State Securities Commission yesterday decided to loosen the daily trading band in effect on the nation’s stock exchanges by one percentage point, only one week after tightening the band.

Effective on Monday, the trading band on the HCM City Stock Exchange will be 2 per cent, while that at the Ha Noi Securities Trading Centre will be 3 per cent.

The trading band refers to the amount listed shares are allowed to gain or decline in value within a single trading day.

Last week, faced with a plummeting stock market, the State Securities Commission severely tightened the band to stave off a rapid decline in share values. The move had a dramatic chilling effect on trading over the past week, as traders simply stayed away from the market and daily volumes slowed to a trickle.

Volume on the HCM City exchange yesterday was only 1.9 million shares, only a quarter of the daily volume on March 25.

Nguyen Son, head of the commission’s market development department, said, "We decided it today as we have seen an improvement in the market in the past several days, and there are many supporting factors in favour of loosening the band, including agreement by commercial banks to delay selling shares they hold as collateral."

While volumes have shrunk, the VN-Index has increased daily within the maximum of the trading band, resulting in a cumulative 6.5 per cent increase in the seven sessions since March 25. The Index yesterday closed at 529.23, up 0.78 per cent.

Meanwhile, Son noted, the narrow band was allowing investors only a tiny profit in day trading, and had had a negative impact on market liquidity.

The market threatened to become frozen if the tight trading band was retained, he said.

A number of market analysts were urging a further loosening to restart sluggish trading.

"How much profit investors can earn with a two- or three-per-cent band? It is so little," said John Nolan, an analyst from a HCM City-based fund management company. "Given that buys are outweighing sells at the moment, investors now are thirsty for stocks."

In other stock markets worldwide, Son noted, there were circuit-breaking systems in place when the market plunges too deeply within the course of single trading session. The domestic market has no similar system, so tightening the trading band was a stop-gap measure.

"In the position of a market regulator, our commission has a detailed plan for better development of the stock market. We will do our utmost to work with other related offices as well as banks and securities firms to find the best way to achieve the best possible result," Son said. — VNS

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