Things are looking up
The VN-Index Tuesday tracked overnight gains in the US, but a rise in turnover could translate into strong selling in next few days.
At present, the market seems overheated. Part of the money pumped into the market comes from banks as they lend against shares or engage in repo services.
Most investors are now day traders who buy shares to sell them soon for a profit. Not many people are thinking about long-term investment. Bubbles will gradually become larger in some stocks.
Hoang Thach Lan, Director of Analysis and Investment Division at SME Securities Corp.
[HCMC and Hanoi] markets broke through key resistance in convincing fashion Tuesday with the VN-Index closing well above the 430 level that has detained us for almost two weeks. A strong overnight performance on international markets gave investors the confidence to push past the mark. Market breadth was similar to Monday in HCMC and somewhat wider in Hanoi. Foreigners were net buyers again Tuesday and buying was stepped up no doubt in response to the technical breakout.
We saw a huge increase in the number of bids Tuesday from the open and clearly there was wide distribution throughout the day. Key stocks all rose to the ceiling in good volumes with about 10 stocks seeing turnover of over 1 million shares each. The market has clearly shown us it has the appetite to move higher despite our recent caution. We still view this as the tail of a fairly long rally but its turning out to be a rather fat tail.
In the short term we may continue to move higher following the recent pattern of one or two days of sharp gains followed by a few days of sideways trading. However, as long as buyers continue rushing in on any intraday weakness as they did Tuesday, the bias will stay to the upside for now. Watch the overall level of bids to see how long this leg will last. Bid levels may have peaked in the morning Tuesday and if the overall bid level falls down below 20 million or so, the upward momentum will slow down and if it falls below 10 million the market will likely reverse itself.
Ho Chi Minh City Securities Corp. (HSC)
Bonds gain on bets rate-cut cycle is over; dong falls
Vietnam's benchmark bonds had their biggest gain in almost two weeks on speculation the central bank is done cutting interest rates after six reductions since early October. The currency weakened.
The central bank may maintain its key interest rate until the middle of 2010, Tai Hui, head of Southeast Asian economic research at UK-based Standard Chartered Plc in Singapore, wrote in a research note, revising an April forecast for a reduction by the end of June. The State Bank of
Vietnam left its benchmark rate at 7 percent for a fourth month in May, having halved it in the four months through January.
The yield on the five-year note Tuesday fell six basis points to 9.2 percent, the biggest decline since May 20, according to a daily fixing price from about 10 banks compiled by Bloomberg. A basis point is 0.01 percentage points.
"Yields drop when there's speculation the central bank will keep interest rates unchanged," said Do Hoang Quynh Trang, a fixed-income trader at Hanoi-based Ocean Commercial Joint-Stock Bank, or OceanBank. "Even though the economy is showing signs of recovery, long-term prospects are still uncertain. Investors are favoring short-term notes rather than five- or 10-year debt."
The central bank set Tuesday's reference rate for the currency at 16,939, versus 16,940 Monday, the bank's website showed. The currency is allowed to trade by a maximum of five percent on either side of the official rate.