The trend on the nation's stock markets this week will greatly depend on signals sent by Government and central bank policies, rather than the second-quarter earnings reports of listed companies, market insiders say.


Late last week, the Government adjusted its inflation forecast for the year to 17-18 per cent – the second time it has raised its prediction since the beginning of the year. As a result, the Government is likely to continue its tightened monetary policies through the end of the year to combat rising inflation.
Kim Eng Securities Company Deputy Director Nguyen Van Manh said that this was the right direction and that the policies had already proven effective in stabilising the economy.
"If tightened monetary policy is carried out effectively until the end of the year, I believe the economic situation will be more stable and that will have a greater positive impact on the stock market than loosening monetary policy now," said Manh.
Alan T Pham, Chief economist at VinaSecurities, also said many foreign investors were expecting the Government to maintain tightened monetary policy at least through the end of the year. Loosening it now might help the stock market rebound in the short term but harm it in the long term.
"Foreign investors closely follow the Government's economic policy, and if this direction continues to be maintained, they will consider disbursement in the future public offerings of State-owned enterprises," said Pham.
Late Friday, Deputy Minister of Finance Do Hoang Anh Tuan held a press conference to announce that the Prime Minister had agreed to the ministry's proposal to exempt income and capital gains from securities investments from personal income tax between August 1 and December 31, 2012. Analysts were waiting on market reaction to this news when trading opened today.
Indices on both national exchanges retreated over the course of last week with trading remaining sluggish as investors became more cautious in the face of rising economic uncertainties.
On the HCM City Stock Exchange, the VN-Index lost 1.87 per cent from the previous week, closing on Friday at 425.29 points. Excluding the value of negotiated transactions last Monday in the shares of dairy producer Vinamilk (VNM), worth a total of VND740 billion (US$35.9 million), the average daily trading value last week dropped 29 per cent from the previous week's level to just VND530 billion ($25.7 million), on a meagre average daily volume of just 24 million shares.
On the Ha Noi Stock Exchange, the HNX-Index declined by an even more substantial 4 per cent over the course of the week, closing Friday at 72.76 points. The value of the week's trades also decreased 21 per cent from the previous week, averaging VND327 billion ($15.9 million) per day on a volume of 28 million shares.
Foreign investors concluded last week as net buyers on the HCM City market, picking up 2.77 million shares worth a total of VND752.6 billion ($36.5 million) – again thanks to heavy purchases in Vinamilk shares when the dairy company increased its foreign ownership ratio from 46 per cent to 49 per cent at the beginning of the week.
Foreign investors remained net sellers on the Ha Noi market, however, unloading over a million shares worth a net of VND6 billion ($291,000).
No domestic or foreign investor expects listed companies to release positive earnings results for the first half this year, particularly real estate enterprises, which have floundered this year. Many of these firms are now looking to the central bank's reaction to the Ministry of Construction's proposal to loosen credit for the real estate sector, noted analysts of the financial website vietstock.vn.
Last week, the Ministry of Construction proposed that the State Bank of Viet Nam allocate different credit growth caps for separate types of real estate projects in order to reduce the proportion of lending made for urban commercial and residential projects and increase lending for the construction of manufacturing projects, while ensuring that projects in progress still have access to financing.