Market stages strong rally on aggressive foreign buying

Foreign buying gave a big boost to the southern stock market on Thursday, pulling the VN-Index up an impressive 8.94 points, or 1.79%, from the session earlier to 508.18 after two falling sessions in a row. Investors bid for 95.1 million shares, increasing 7.4% from the previous session, while they offered 74.9 million shares, falling 13.1%. At the end of the day, the market’s total trading volume was 53.7 million shares worth VND2.5 trillion, increasing a quarter in value from the session earlier. A staggering 11.9 million shares worth VND776 billion were transacted via put through, including 6.8 million shares of Vinamilk (VNM) and three million shares of Masan Group (MSN). Of special note was the heavy buying by foreign investors, who acquired 13.7 million shares worth VND885.4 billion and sold 9.2 million shares worth VND680 billion. Their buying accounted for 35% of the total value. The market opened a little higher and from the end of the continuous matching phase, it began to move up sharply to the daily high of 508.91 points before closing just slightly below that level. In terms of the VN-Index, PVF, DPM, and HAG made the biggest positive contribution while EIB, SGT, and VPH made the biggest negative contribution. There were 162 stocks closing higher and 24 others falling, with 26 stocks hitting the ceiling prices and only one dropping to the floor. Blue-chips except Eximbank (EIB) were the biggest booster to help the index beat the 500-point level. Sacombank (STB) was the most traded stock on the bourse as it rose 2.3% to VND22,200 per share with 2.47 million shares changing hands, followed by Saigon Securities Inc. (SSI), which increased 1.2% to VND43,700 per share with 1.7 million shares traded. Hochiminh City Securities Co. (HSC) in its daily report said that the markets turned around nicely in decent volumes as a combination of heavy foreign participation in the put-through session and a return of retail investors buoyed sentiment. The market was subject to some rumors from the outset concerning the central bank’s possible micro tweaking to provide additional liquidity in the banking system, it said. “Today seemed like a knee-jerk movement after a period of selling and we may well see further upside tomorrow or even the next day,” the broker said. Meanwhile, VinaSecurities in its report commented the rumor which spurred the markets was that the central bank may cut the dong compulsory reserve ratio by as much as 2% to get more money into the markets. The State Bank of Vietnam then rejected the rumor in local media, which, according to VinaSecurities, means investors will continue to wait for a move to free up liquidity. “With the current U.S. dollar shortage and low credit growth (2.95% in the first quarter of 2010), the equity market has little gas to run on and any further gains in the market will, undoubtedly, be met by stiff resistance,” it added. Hanoi’s market also recorded a rebound as the HNX-Index increased 3.27 points, or 2.04%, from the previous session to 163.82. The market’s total trading volume was 21.8 million shares worth VND764.4 billion, falling 2.8% and 1.9% respectively from the session earlier. There were 130 stocks rising and 96 others falling, including four rising to the ceiling and no stock tumbling to the floor. Contradictorily, foreigners on the northern bourse were net sellers to the tune of VND4.4 billion worth of shares.