Bank shares drive market down

Thursday, Jun 22, 2017 08:00

Bank shares fell on Wednesday, pushing the VN-Index down. – Photo

Shares declined for the first time in the last three days as banks lost momentum on Wednesday on rising profit-taking pressure after a long rally.

The benchmark VN-Index inched down 0.08 per cent to close at 767.41 points. The HCM Stock Exchange’s index rose nearly 1 per cent in the two previous sessions.

On the Ha Noi Stock Exchange, the HNX-Index was down 1.12 per cent to end at 98.68 points. The northern market index expanded 1.5 per cent in the last two trades.

Bank stocks slumped with six of nine listed banks on the two exchanges losing value.

Three largest listed lenders – Vietcombank (VCB), Vietinbank (CTG), BIDV (BID) – slipped 3.2 per cent, 3.1 per cent and 1.2 per cent, respectively. Other banks on the Ha Noi bourse fell between 1.3-7.7 per cent each.

Only Eximbank (EIB), Sacombank (STB) and Military Bank (MBB) maintained growth.

The National Assembly on Wednesday officially approved the resolution on bad debt settlement which takes effect for five years starting August 15, 2017 and deals with non performing loans (NPLs) arising until the date that the resolution takes effect.

“Basically, this is supportive information for the banking sector in general and some banks currently struggling with bad debts in particular (typically BID and STB),” said Tran Hai Yen, a stock analyst at Bao Viet Securities Co.

“However, because this information is not new and has been reflected in the current upward trend of bank stocks, the official approval cannot offer more supportive effects,” Yen wrote in a report yesterday.

In the medium term, she forecast that bank stocks could maintain current upwards momentum when the bad debt settlement resolution starts to bring actual improvements.

In another event that affected the market, MSCI on Wednesday announced the results of a market classification review following which, despite high expectations of investors, the Vietnamese stock market has yet to be included in the emerging market index and will remain a frontier market.

The local market has satisfied some quantitative criteria such as capitalisation and liquidity but fell short of some requirements such as liquidity readiness and openness to foreign investors.

“Therefore, Viet Nam still has room to be considered for inclusion in the emerging market index and this information could return and support the VN-Index in the medium term,” Yen said.

Some large-cap stocks recovered near the end of the session and cushioned the market fall, including Vinamilk (VNM), Petrolimex (PLX), brewery Sabeco (SAB), real estate developer VinGroup (VIC), tech giant FPT Corp (FPT) and Mobile World Group (MWG).

Liquidity remained high with a total of over 320 million shares worth a combined VND5.34 trillion (US$235.4 million) being traded on the two markets, up 7.7 per cent in volume but down 3.4 per cent in value compared to Tuesday’s levels. – VNS

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