Eurozone debt resolution lifts shares

Shares rallied last week on news that eurozone leaders had agreed to slash Greece's debt burden by half and increase the size of the bailout fund to around a trillion euros (US$1.3 trillion).

"This means that the Greek government has the ability to battle against insolvency, and it is hoped that the measures can put the ongoing debt problems to an end," said Kim Eng Securities Co analyst Phan Dung Khanh.

The past week held mixed news for the Vietnamese economy, however. While inflation in October rose by only 0.36 per cent, its lowest one-month increase in the past 14 months, the continuing weakening of the domestic currency continued to make investors nervous.

Since October 4, the Vietnamese dong has been devalued by about 0.85 per cent, reaching VND20,803 per US dollar this week. The devalution gives the lie to the central bank's earlier pledge to hold the cumulative devaluation to less than 1 per cent through the end of the year.

The State Bank of Viet Nam last week also submitted to the Government a draft decree on gold trading, aimed at limiting the impacts of the gold market on monetary policy and the exchange rate.

"The securities market expects to attract money from the gold market, prompting a new rally," said analysts for financial website vietstock.vn. "However, the demand for gold in the country is huge, and it tends to increase sharply in unstable times."

The best news on the domestic market last week with the results of the latest auction of Government bonds. The treasury was able to raise VND1 trillion ($47.6 million), selling 50 per cent of its latest bond issue at yields of 12.1 and 12.15 per cent for three-year and five-year bonds, respectively.

"This suggests that things have become easier for the capital markets," said Maritime Bank Securities Co analyst Tran Quoc Hoan.

On the HCM City Stock Exchange on Friday, the VN-Index closed at 422.07 points, up 2.7 per cent from the previous week's close. The average daily value of trades reached VND469.3 billion ($22.3 million), up 8.3 per cent over the previous week, on an average volume of 26.5 million shares.

Insurance shares saw the greatest rebound, gaining of 11.75 per cent, with market leader Bao Viet Holdings (BVH) hitting its ceiling price for several sessions.

Military Bank (MBB) will list on the HCM City exchange tomorrow at a reference price of VND13,800 per share.

"This is important news to foreign investors, as many other banks, such as Asia Commercial Bank (ACB), Sacombank (STB) and Eximbank (EIB), have nearly run out of room for foreign investors," Khanh said.

"Going public will boost the value of our shares, assuring benefits for our shareholders while helping the bank more quickly raise capital and standardise its governance system," said Military Bank general director Le Cong.

On the Ha Noi Stock Exchange last week, the HNX-Index also edged up 1.2 per cent over the previous week's close, concluding Friday's session at 69.94 points. The average trading volume of the week totalled 29 million shares worth an average value of VND286 billion ($13.6 million), which also rose by around 8 per cent over the previous week.

Cash continued to flow into real estate shares in HCM City, especially Becamex Infrastructure Co (IJC) and Hoang Quan Corp (HQC), while investors favoured familiar financial stocks in Ha Noi, including Kim Long Securities (KLS), VNDirect Securities (VND) and Sai Gon-Ha Noi Bank (SHB).

Foreign investors concluded the week as buyers, picking a combined net of VND145 billion ($6.9 million) worth of shares.

(source: VNS)

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