Solid stocks trend hints at long-term rally

Solid stocks trend hints at long-term rally

The VN-Index rose 3.8 per cent on the HCM City Stock Exchange last week compared to the previous week, rising to 518.39 points.

Order matching reached an average of VND1.38 trillion (US$65.7 million) per session, climbing 50 per cent.

On the Ha Noi Stock Exchange, the HNX-Index increased 3.2 per cent over the previous Friday's close to 64.62 points. The average trading value reached more than VND550 billion ($26.1 million), soaring 56 per cent.

MB Securities Co's head of market strategy department Trinh Xuan Son said that based on share movements during the past two weeks, the market has started a long-term rally.

The investment trend this year would focus on shares that have a solid foundation, rather than low-priced shares, said Son. While the VN-Index had been predicted to fluctuate between 440-650 points this year, Son said he hoped another fall to 440 points would not occur.

"The index could hit the maximum 650 points," he said.

The index in May grew 9.4 per cent compared to April. Liquidity also jumped by about 44 per cent. Although the rally was mainly thanks to cash flow into stocks that reached reasonable price levels, economic policies also helped, with the VND30 trillion (US$1.42 billion) stimulus package for the real estate sector, the official decision to establish a national debt management corporation and the delay on implementing circular 02/2013/TT-NHNN on classifying bank loans all helping to buoy the markets.

The circular, which was set to come into force on June 1, has been delayed by one year. It includes important changes that will bring local practice more into line with international standards. However, after preparing for the circular's implementation, domestic banks reported that the move would see bad debts increase from the current 3-4 per cent to around 10 per cent as it would require higher provisioning and tighter lending policies applied by banks.

Vietnamese stocks last month proved to buck the trend in the US, with the message "Sell in May and go away". Data from many financial information services showed that 66 per cent of listed stocks added value in May.

On Friday, Sacombank (STB) continued the sale of more than 47.8 million shares owned by its former CEO Dang Van Thanh and his son Dang Hong Anh to clear their debts.

The sale was performed in accordance with the bank's commitments in last year's financial report to settle debts that Thanh and Anh had caused due to illegal financial investments.

After last Friday's transaction, Thanh no longer owns any shares in the bank while Anh still holds 7 million shares.

Last week, property developer Vingroup (VIC) announced its partnership with private equity investment fund Warburg Pincus, which promised to invest $200 million and help Vingroup list shares on the international market.

This is the largest first investment by an international private equity fund into the Vietnamese stock market.

Earlier this year,Kohlberg Kravis Roberts also poured $200 million into Masan Group (MSN), in what was the fund's second investment in Masan.

The first five months of this year saw the highest foreign investment in the stock market during the past five years, according to Bloomberg. As of May 28, foreign investment funds totaled a net buying value of $254 million.

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