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Friday trades snap six-day rally   2011-06-07 - VNS

Shares rose in four out of five trading sessions on the HCM City Stock Exchange last week, with the VN-Index closing up on Friday by nearly 8 per cent over the previous week's close to 443.41 points.


It was Friday's session that ended up snapping six consecutive sessions of gains, with both the volume and value of trades soaring on heavy profit-taking.


Overall, however, trades remained sluggish last week, with the average daily trading value dropping 10 per cent from the previous week to just VND615 billion (US$30 million) on an average volume of 33 million shares per day.


Market gains were initially motivated by familiar large caps such as insurer Bao Viet Holdings (BVH), food producer Masan Group (MSN) and property developers Vincom (VIC) and VinpearlLand (VPL) but then spread to most shares across-the-board, with over 55 per cent of codes hitting their ceiling prices on Wednesday and Thursday.


Investor confidence improved significantly on news on Tuesday that the Ministry of Finance had issued a new circular allowing margin trading, multiple trading accounts and intra-day trading, effective August 1.


Nguyen Quang Minh, a stock analyst with the financial website, believed recent market advances had been stimulated by the leaked information of new eased trading rules before the ministry's move was publicly announced.


But this good news failed to sustain the market on Friday when people rushed to sell shares to realise cash profits after six successive rising sessions. The VN-Index declined 1.6 per cent while both trading volume and value rose over 34 per cent.


However, Thang Long Securities Co chief economist Pham The Anh believed that investors had already been using multiple trading accounts to buy and sell securities and had borrowed money from brokerages to invest in stocks through co-operation contracts. The circular therefore simply legalised what had already been taking place on the market.


"In my opinion, medium- and long-term growth should come from economic stability and positive business results of listed companies rather than technical or administrative measures," Anh said, although he conceded that the circular would help create a more level playing field for both investors and brokerages and could therefore help boost the liquidity of shares.


Trading in the coming week would be heavily influenced by investor psychology as many still had doubts about the recent rebound and feared that a "bull trap" would appear, Minh said, but he believed the circular would have additional positive impact on investor sentiment.


"Besides, the market is still very attractive, with more than 77 per cent of shares priced below book value and over 45 per cent being trading below their face value," Minh said.


On the Ha Noi Stock Exchange, the HNX-Index also climbed by 4.29 per cent over the course of last week to close on Friday at 73.87 points, although all of the gains were concentrated in just two sessions. Average daily trading value reached nearly VND390 billion ($18.9 million) on an average volume of 36.3 million shares, almost unchanged from the previous week.


Foreign investors contributed to the market rise last week, continuing to be net buyers on both exchanges and picking up a net of over 10 million shares worth a net of VND258 billion ($12.5 million).

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