VN-Index hits record high on upb
VN-Index hits record high on
upbeat financial news
HCM City Securities Trading
Centre�s VN-Index closed above the 1,000 point threshold for the first time
yesterday, on the back of upbeat financial and news reports, though overall
market risks remain.
The index ended the week at
1,023.05 points, up 4.06 per cent for the day, despite thin trading volume. Only
9.72 million shares and bond certificates exchanged hands, down 36 per cent
compared to Thursday�s session. Trading value was just above VND1 trillion
Blue chips led the change with
Vinamilk rising 4.86 per cent to VND194,000 a share, while telecommunication
firm FPT ended at VND578,000, up 4.9 per cent.
Buying was sparked earlier in the
week after international financial magazine Motley Fool ranked Vietnamese stocks
third in profit making. Local papers also reported that foreign fund managers
continue to be upbeat on the local securities market this year.
Prudential Balanced Fund
certificates were the most heavily traded shares yesterday with volume at
860,250. It closed at VND13,100.
The market was also helped by the
release of positive 2006 financial reports. FPT on Thursday announced VND535
billion in (unaudited) annual profits, up 77.5 per cent compared to 2005.
Sai Gon Thuong Tin Commercial
Bank (Sacombank) reported VND544 billion in pre-tax profits, up 78 per cent
year-on-year, and plans to issue a 12 per cent dividend payment.
Song Da Urban and Industrial Zone
Investment and Development (SJS) last week issued a three-to-one stock split by
issuing new shares to existing shareholders. The stock price fell from
VND728,000 to VND190,000 after the split.
Since then, SJS has quickly
gained ground, rising 20 per cent in the last five sessions to end Friday at
Insider trading hurts
Earlier this week, the Viet Nam
Association of Financial Investors (VAFI), in a letter to the Ministry of
Finance, urged for better transparency in the securities market to minimise
Nguyen Hoang Hai, the
association�s general secretary, expressed concern that the present market
monitoring mechanism leaves a lot of room for insider trading. VAFI has cited
several occasions when heavy activity in a particular stock preceded the
announcement of material information.
According to current regulations,
listed companies must disclose information and data to the securities trading
centres, which is then responsible for publicly releasing it. The problem is
that it could take as long as four or five days to pass through market
VAFI has proposed that listed
companies send information simultaneously to the centre and the media, a common
practice in other Asian and Western markets.
In statements to on-line
publications, Tran Van Dung, director of the Ha Noi Securities Trading Centre,
says the proposal is not feasible. The centre, as a market moderator, needs to
screen data and sometimes suspend trading ahead of sensitive information being
Dung, however, admits stricter
controls should be enforced in information management to prevent leaks.
Hoang Hai adds that the finance
ministry should not only strengthen transparency but should also encourage the
two securities trading centres to behave more like joint stock companies.
"If the centres operate under the
joint stock company model, their directors would then have to take full
responsibility for their operations, profits and performance," he says.
The centres are managed and
supervised by the State Securities Commission as dependent administrative
"Stiffer penalties are essential
to minimise such practices [of insider trading]," says To Hai, director of Bao
Viet Securities� HCM City branch.
Insider trading puts smaller
investors at a huge disadvantage since they are usually not privy to the same
information as their larger, well-connected counterparts.
"Those who receive insider
information can easily order shares prior to an official announcement," Hoang
Hai says. "They can easily turn a quick profit," while reducing their risk
exposure to almost nothing