The State Bank of Viet Nam's announcement on Thursday that it would keep the prime interest rate at 8 percent for at least another month helped save the HCM City Stock Exchange from a decline on Friday, as the VN-Index managed a modest gain of 0.38 per cent on the day to close at 505.30.
Meanwhile, the volume of the day's trades jumped by nearly 21 per cent to 62.2 million shares, while value rose by over 13 per cent to VND2.48 trillion (US$130 million). Advancers outnumbered decliners by just 91-82.
Saigon Securities Inc (SSI), with share prices "cheaper" following its recent stock split, was the most-active share with a brisk 7.1 million traded.
The southern bourse yesterday also welcomed the listing of 15.5 million shares of stationery maker Thien Long Group (TLG). TLG lost 8 per cent of its value on the first day of trading, however, closing at VND35,000 ($1.83) per share on a volume of 112,440.
On the Ha Noi Stock Exchange yesterday, the HNX-Index also closed flat at 163.76. Trading volume fell by over 22 per cent to 24 million shares, worth a combined VND811.69 billion ($42.5 million), off 17 per cent from the previous day's trading value.
While most major shares on the northern market lost value yesterday, including Asia Commercial Bank (ACB), Vinaconex (VCG), Kim Long Securities Company (KLS) and PetroVietnam Construction (PVX), gainers still outnumbered losers by 129-99. KLS continued to lead the market with over 3.6 million shares changing hands. The State Bank's decision on the prime rate eased the minds of some investors worried about rising inflation and changes in monetary policy, fears stirred once again by the HSBC's forecast in a report released this week.
Holding the course on the prime rate reflected the policymakers' determination to ensure economic growth and control inflation at the same time, said SME Securities Company Deputy Director Pham Duc Thang.
"Raising the prime rate at this time is unlikely to prove effective in curbing inflation as the current lending rate is beyond the profit-making capacity of many enterprises," Thang said.
Though the prime rate was not elevated as the HSBC had predicted, the Vietnamese Government still faced many challenges before it could meet its inflation target of no more than 7 per cent, said Dai Viet Securities Company analysts.
Although investor psychology remained cautious and only improved in the second half of yesterday's trading session, robust trading volume and value showed a large number of investors had placed faith in a market rally and increased buying, said FPT Securities Company in a daily report.
Foreign investors yesterday also concluded the day's trades as net buyers of nearly 900,000 shares, worth a combined VND52 billion ($2.7 million). They were also net buyers on the Ha Noi market, but by a less significant total of about VND2 billion ($104,712).