A heavy sell-off of shares pushed the VN-Index back below 500 yesterday, with the Index shedding 3.06 per cent of its value on the day to close at 499.14 points.


The activity drove up volume on the HCM City Stock Exchange, however, with total transactions reaching 49.5 million, or 21.2 percent higher than Tuesday’s volume. Eximbank (EIB) led trading with a volume of 9.8 million shares.


The total value of the day’s trades on the southern exchange exceeded VND2 trillion (US$110 million).


The combination of strong volume and a plunging Index signalled strong profit-taking which had been predicted to occur when the Index ranged around 518-521, said Thang Long Securities Co deputy director Quach Manh Hao.


But the sell-off seemed to have been triggered early yesterday by a rumour spreading among investors that the State Bank would impose a compulsory purchase of T-bills on commercial banks and raise their compulsory reserve rate, said Hao.


The rumour seemed reasonable in the context of the Government’s stated concern this week for controlling inflation in 2010, Hao added.


The State Bank of Viet Nam denied the rumour on its website yesterday and urged investors to report the sources of such rumours to the central bank in order to help preserve the stability of the stock market.


On the Ha Noi Stock Exchange yesterday, the HNX-Index also dived by 5.14 percent to 160.02 points. The value of trades on the northern market totalled VND826.73 billion ($45.9 million), on a volume of over 23.6 million shares.


Asia Commercial Bank (ACB) was the most-active share with 2.9 million traded.


But the Government’s confirmation this week that it would halt its subsidised-interest loan programme at the end of this month for short-term loans contributed to a poor performance by banking shares yesterday.
"Although the end of the programme has been discussed previously, the confirmation still rattled investors," said Dao Van Khanh, an analyst with a Ha Noi-based securities company.


Khanh noted that the State Securities Commission had also announced plans to shorten clearance periods to allow margin trading, giving investors a confusion of good and bad news yesterday and causing many to simply seize the moment to cut and run.


This seemed particularly to be the case since the domestic market ran counter to overnight gains on Wall Street, where the Dow Jones hit a one-year high.


Accordingly, foreign investors bucked the prevailing trend to continue as net buyers in both HCM City and Ha Noi, picking up yesterday a combined net of 2.9 million shares.