Vietinbank, Vietcombank lift sagging market

HA NOI (VNS)— Stocks gained value last week on both of the nation's stock exchanges, boosted by a modest recovery in bank shares. However, the volume of trades decreased markedly as fears about the long-term health of the banking industry spooked investors away from the stock market.

Information released by the State Bank of Viet Nam, including data on the performance and bad debt ratios of commercial banks during the first nine months of the year, has revealed a growing malignancy inside the nation's banking system, cautioned PetroVietnam Securities Co analyst Dao Hong Duong.

The average bad debt ratio at the end of August reached 8.6 per cent, Duong said, while the resignation of Sacombank chairman Dang Van Thanh has clearly affected the stock market over a number of sessions.

The central bank also announced last week that it had conducted a comprehensive audit of 32 credit institutions, most of which reported reduced earnings in the wake of the audits as they were asked to make stronger risk provision. Among commercial banks that had previously reported profits but which flipped to losses were Navi Bank (NVB), Tien Phong Bank, TrustBank and Western Bank.

The boost for last week's modest rally among banking shares came predominantly from foreign investor interest in Vietinbank (CTG) and Vietcombank (VCB) – two leading banks that continue to be majority-owned by the State.

On the HCM City Stock Exchange, the VN-Index added 3 per cent in value over the course of last week, reaching 386.71 points. The average daily value of trades dropped by around 30 per cent from the previous week to VND2 trillion ($95.2 million).

On the Ha Noi Stock Exchange last week, the HNX-Index edged up 1 per cent over the previous Friday's close to 51.58 points. The average value of trades fell, however, to just VND149.5 billion ($7.1 million) per session, a decline of 25.5 per cent, while the daily volume of trades averaged only 25 million shares.

Sai Gon-Ha Noi Bank (SHB), Navibank (NVB) and property developer Sacomreal (SCR) saw surging trading volumes and together accounted for 44.25 per cent of order matching volume last week on the Ha Noi bourse. Excluding these transactions, the average daily volume in Ha Noi fell to just 13.5 million shares.

The lack of supporting information has made investors more cautious and halted cash flows, Duong said.

"The impetus for another increase is relatively weak, so the risk of short-term share price declines will rise as stock indices approach strong resistance levels," he said. — VNS

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