Stocks bounce back on global gains

Stocks bounce back on global gains

All but one of the 164 listed securities on the Ho Chi Minh Stock Exchange rose by the maximum allowed 5 percent Tuesday in the wake of strong global gains.

The VN-Index of 160 leading firms and four closed-end funds rose 17.66 points, or 4.75 percent, to close at 389.33. Food processing firm Safoco was the only stock not to advance by 5 percent; it rose by just 4.08 percent.

But a lack of selling saw trading volume slump sharply to nine million shares from Monday’s 13.7 million.

“The recovery of international markets boosted domestic mood,” said Nguyen Hai Son, a broker at FPT Securities Co. He expected the VNIndex to end the week at 420-430 points.

Global markets soared for a second day running Tuesday, with Tokyo posting its biggest-ever gain after governments worldwide threw lifelines to ailing banks.

It closed up by a record 14.15 percent as Japan unveiled market-stabilizing measures, including a relaxation of restrictions on corporate share buybacks. Sydney closed up 3.7 percent on Tuesday and Seoul climbed 6.1 percent.

In Europe, the London stock market was 3.40 percent higher in early trading. The Paris stock market jumped 4.18percent, a day after rising more than 11 percent, its largest ever one-day gain, Frankfurt was 3.14-percent higher early on, Madrid gained 3.31 percent and Zurich rose 3.74.

US President George W. Bush and Treasury Secretary Henry Paulson were both due to make statements Tuesday on the action being taken by Washington and other major governments.

“Besides the positive performance of international markets, investors were also upbeat over good third quarter results,” Son said.

He said foreign investors sold heavily Tuesday, making up 73 percent of the market’s overall selling. “It wasn’t a sign of withdrawal,” he said. “Foreigners, particularly institutional investors, are restructuring their portfolio.”

Foreign players were net sellers, notching up a net negative figure of VND184 billion (US$11 million). They sold vegetable oil maker Tuong An, industrial zone operator Tan Tao, Pha Lai Thermal Power, rubber producer Tay Ninh and Seafood Joint Stock Co. No. 4.

Ho Quoc Tuan, an analyst at HCMC-based Viet Dragon Securities Co., said: “The global financial crisis has made foreign funds more cautious and prudent with their investments. So they are trying to sell their shares and hold on to cash to wait for better opportunities.”

Tuan said domestic investors tend to panic when they see foreign investors selling stocks and stock indexes falling worldwide. “The possibility of an electricity-price increase and the imposition of personal income tax on earnings from share trading may also make the situation worse,” he said. “The market may drop more this week.”

Tuan also suggested it may be worthwhile to look at opportunities at around the 300 to 360 level on the VNIndex in the short term.

“From a long-term perspective, it is better to wait until there is more information about inflation, the trade deficit, the performance of the banking system and the real-estate market, power-price increases, and the effect of global demand and the new personal income tax on share earnings,” he said.

“If stocks of some good Vietnamese companies are still being traded at low levels at the end of this year, I would see it as an opportunity.”

Vegetable oil producer Tuong An, which rose VND1,900, or 4.95 percent, to close at VND40,300, was the most active stock, with more than one million shares changing hands.

Thanhnien