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Market extends gains on rate cut   2008-12-20 - Bloomberg

Ho Chi Minh City shares made further ground Friday, giving the VN-Index a three-day winning streak, on rumors the central bank will slash the key rate, which came true later in the day.

 

The index climbed 1.7 points, or 0.56 percent, to finish at 307.26. The gauge gained 2.6 percent this week, the first weekly advance since November 7.

Nearly 15.6 million shares worth VND364 billion (US$21.4 million) changed hands, with 88 stocks advancing, 48 declining and 37 remaining unchanged.

Nguyen Anh Tuan, deputy head of brokerage at the HCMC-based Viet Dragon Securities Corporation, told Thanh Nien Daily that investors continued to react favorably to reports that the government would lower the base rate and delay the introduction of capital gains tax.

Later in the day, the State Bank of Vietnam cut the benchmark interest rate from 10 percent to 8.5 percent, effective from December 22, according to the bank’s website.

“Foreigners remained net buyers and much of today’s activity on the foreign side consisted of two large put through deals in MPC and VPL. But domestic investors seemed very cautious and prices traded in a narrow range today,” Fiachra Mac Cana, managing director of HCMC Securities Corporation said in a daily market comment.

“The question is will this interest rate cut do what previous cuts have failed to do, which is to bring investors back into equities? It might do this time and certainly it was the largest cut in rates in the current cycle.

“The other question on people’s minds is whether or not the State Bank of Vietnam will widen the trading band as interest rates and currency rates are inevitably linked together. They may wait a little while longer but our feeling is that the trading band will be widened again in the not too distant future.”

PetroVietnam Finance Corporation, the sixth biggest stock on the exchange, gained VND800, or 4.5 percent, to close at a one-month high of VND18,400. The financial arm of state-owned Vietnam Oil & Gas Group will pay a dividend of VND1,000 per share, starting from December 22.

PetroVietnam Transportation Corporation, known as PV Trans, added VND700, or 4.5 percent, to close at a 17-day high of VND16,200. The crude oil transportation firm’s 11-month profit figure was VND100 billion ($5.9 million), or 83 percent higher than its full-year plan, Dau Tu Chung Khoan magazine reported Friday.

Licogi 16 surged to its highest level in almost four weeks, advancing by VND1,500, or 4.7 percent, to VND33,400. Sacombank Securities Company has bought 189,000 shares to raise its stake in the construction firm to 5.7 percent from 4.3 percent, according to a statement on the bourse’s website.

An Pha S.G Petrol Joint Stock Company rose VND500, or 4.2 percent, to VND12,300. The company plans to issue bonus shares next February at the rate of two shares for every three held.



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