VietNamNet Bridge - Investor pessimism over the impact of high inflation on the nation’s economy continued to depress share values and trading volumes on both of the nation’s stock exchanges last week.

On the HCM City Stock Exchange, the VN-Index retreated by 0.72 per cent from the previous week’s close to end Friday’s session at 460.96 points. The average daily value of trades dropped by 14 per cent from the previous week to just VND538.6 billion (US$25.8 million), on an average daily volume of 24.5 million shares.

Gains by a handful of influential stocks helped cushion the fall of the Index, with the Large Cap Index rising by 0.55 per cent over the course of the week. Conglomerate Masan Group was one of the leading advancers, posting a gain of 9.64 per cent last week to close Friday at VND91,000 ($4.35) per share, after news that global investment firm Kohlberg Kravis Roberts (KKR) had paid a high price for shares of Masan Consumer, a Masan Group subsidiary.

KKR agreed to buy a 10-per-cent stake in Masan Consumer for over $159 million in the largest-ever private equity investment in Viet Nam. KKR paid over VND220,000 ($11) a share even though this company’s shares were trading on the over-the-counter market for around VND150,000 ($7.20), saying that it put faith in the strong prospects for Masan Consumer as well as the Vietnamese market overall.

Adiran Cundy, head of research at VinaSecurities Co, told Bloomberg that foreign private equity investors were looking to invest in industries like consumer goods, cooking and cosmetics in Viet Nam where companies could pass on price increases.

On the Ha Noi Stock Exchange, without the support from large caps that helped shore up the HCM City market, the HNX-Index declined by a more substantial 2.53 per cent last week to close on Friday at 87.98 points. Volumes averaged just 19.6 million shares per day, worth only VND291.3 billion ($13.9 million), a drop of 11 per cent in both volume and value from the previous week’s levels.

The central bank’s decision to impose higher foreign currency reserve requirements on commercial banks and the application of a ceiling on interest rates they can pay on US dollar deposits did not affect the market much either way, said FPT Securities Co analyst Nguyen Van Quy.

The market was influenced by highly conservative sentiment among both buyers and sellers, Quy wrote in a weekly report, adding, “Demand increases when share prices fall but no ‘dumping’ shares has appeared.”

Trades in the coming week were likely to remain modest and heavily influenced by the April inflation report, said Nguyen Quang Minh, an analyst for a Ha Noi-based financial information services company.

Minh said that, if April’s one-month inflation rate topped 2 per cent, as many analysts have forecast following the March hike in fuel prices and electricity rates, then the cumulative inflation rate in the first four months of the year would exceed 8 per cent and further depress already gloomy investor sentiment.

“If that happens, the State Bank of Viet Nam will likely further tighten monetary policy and raising a higher compulsory reserve requirement for Vietnamese dong could also be applied,” Minh said.

Foreign investors continued to be net buyers on both stock exchanges last week, picking up a net of VND125 billion ($6 million) worth of shares.

Source: VNS