March came in like a lion on the domestic stock exchange – or at least like a healthy tomcat – as the VN-Index began the new trading month yesterday with a gain of 1.23 per cent, bringing the nation's leading share index back above the psychologically important 500 mark to a close of 503.01.
The value of the day's trades on the HCM City Stock Exchange totalled VND1.25 trillion (US$65.8 million), as trading volume continued to pick up steam, reaching a total of 34.4 million shares. Sacombank (STB) was the most active share, with 3.5 million traded, although Vinh Son-Song Hynh Hydropower (VSH) made an impressive showing, with a volume of 2.6 million shares.
On the Ha Noi Stock Exchange, the HNX-Index charged into the new month by an even more impressive 2.37 percent, ending the session at 166.68 points. Value reached a total of VND629.6 billion ($33.1 million) on a volume of 19.5 million shares, 40.2 per cent heavier than Friday's volume.
Kim Long Securities Company (KLS) was again the most active shares on the northern market, with 4.25 million changing hands. The firm announced yesterday that it would pay a 3.5-per-cent cash dividend on 2009 profits, with March 10 the deadline for shareholders to participate.
Nguyen Xuan Toan, from a Ha Noi-based securities firm, said that the markets were in a short-term uptrend that would be consolidated as gold trading became restricted and the real estate market remained frozen.
Economic policies announced this week was mostly favourable to business, as well, such as the State Bank of Viet Nam's decision to leave the prime rate unchanged at 8 percent.
Even the State Bank's decision this week that commercial banks will be able to negotiate lending interest rates without a cap tied to the prime rate might prove beneficial to business in the long run.
"Such a system will help commercial banks lend more to enterprises, freeing up flows of capital into the market," Toan said.
Nguyen Duc Thi, an analyst with Bao Viet Securities Company, concurred, saying that commercial banks would benefit from such a system if they maintained a margin between deposit and lending rates of around 4 to 5 percent.
Banking stocks would then have enhanced potential for medium- and long-term investment, Thi said.
Concerns continued to be focused on foreign investors, who seemed to be spooked by a possible ignition of inflation and were becoming more cautious with local trading, Thi added.
Foreign investors were net sellers on both stock exchanges yesterday by a combined net of 2.4 million shares, worth a total of VND75 billion (About $4 million).
But Thi remained optimistic for the long-term health of the market so long as the economy were stable and credit flows freer.
"If the HCM City market can thrive with the Index at around 520, investors can definitely expect a bullish month," said Toan, recommending banking, real estate and consumer goods stocks.