Deep Market Plunge Not A Likely Scenario
By Nguyen Quan
Transactions on Vietnam’s stock market on January 6-12
The State Bank’s policies on the monetary market seem to have been a critical factor used to assess the overall mindset of the stock market in the near term. As banks resumed offering loans, though at high rates, liquidity slightly improved.
Last Friday, the stock market saw its trading value double the average in the week before (December 28-31, 2009), lifting the trading value on both bourses to over VND5 trillion. Given the above surge in trading value, financial analysts said that the financial leverage, mortgage loans, capital from the gold market and idle money poured into the market have helped enhance liquidity during last week (January 4-8).
Some brokers said that last week, many securities firms offered loans equivalent to 50% of the total capital, including shares, investors had in their securities accounts. However, the number of customers applying for the loans was not very high as many were still very cautious about the market.
What made securities firms quite confident in allowing investors to use the financial leverage was attractive stock prices in the long run. However, since the capital allocated for loan services was securities firms’ own assets, not from banks, it was limited. Therefore, it is difficult to boost the market with such a financial instrument in a short time.
As the real estate, gold and forex markets were relatively stable and lukewarm, investors with idle money were waiting for more active channels to invest in, of which the stock market was appealing. This was reflected in the fast increasing number of new accounts over the past few days at Ho Chi Minh City Securities Corporation, said deputy general director Trinh Hoai Giang.
Analysts believed that capital will flow to stock exchanges. Consequently, a market plunge may not be a likely option in the future. Nonetheless, it is no longer easy for investors to gain handsome profits in the short term because stocks will strongly categorize.
At the close of the January 12 trading session, the VN-Index lost 16.75 points or 3.25% to 498.31 points with over 52.73 million shares traded, worth nearly VND2.33 trillion. Likewise, on Hanoi bourse, the HNX-Index dropped 6.46 points or 3.65% to close at 170.57 points with total trading volume in excess of 27.60 million shares, worth more than VND989 billion.