Fresh Cash Reviving Market Lifeblood

A VNDirect Securities broker said a third of his clients were purchasing stocks in stark contrast to little money deposited into trading accounts in previous months.

“My colleagues [in the brokerage department] have been very busy, which is encouraging considering the past challenging times,” said the broker, declining to be named.

Insiders said VIP clients were stepping up to the plate with several VIP clients each depositing VND5-10 billion ($241,000-483,000) into their trading accounts daily. Rebounding liquidity has arrived in step with hot rumours of merger and acquisitions (M&A), particularly in banking. Brokers said valuable assets with cheap prices and distressed firms with expected changes in ownership were proving hot tickets.

A mass of large-cap stocks in banking, securities and real estate, along with a number of penny stocks of struggling enterprises, have seen their matching volumes per session accelerating to some millions of units each so far, much higher than just 200,000-500,000 units in previous months.

“I see that my VIP clients are quite confident,” said the mentioned-above veteran broker.

That sentiment is in contrast with the central bank’s directive to strictly limit securities sector credit. The combined matching values on the two bourses even accelerated to VND1-1.4 trillion ($48.3-67.6 million) per session pushing up the VN-Index and HNX-Index.

In some sessions, put-through transactions, which generally imply transactions between major shareholders, further boosted the bourses. M&A activities stirred the industry last week with Eximbank announcing the bank and its allies were holding a 51 per cent stake in Sacombank and requiring Sacombank to re-elect its board of directors. The two banks’ stocks have outperformed on the Ho Chi Minh Stock Exchange (HoSE) with millions of shares traded via both matching and put-through volumes.

Last week, Habubank (HBB) started to come alive on the Hanoi Stock Exchange with surprising matching volumes of 8-13 million units in each session. “Banking and real estate stocks are rallying the most with apparently no fundamental improvements. Those stocks are supported by expectations about movements in M&A activities,” said Mac Quang Huy, deputy general director for Thang Long Securities.

“Big investors actually see the central bank’s directive to limit securities sector credit as a positive move as that flags stable macroeconomics,” Huy noted. However, institutional investors generally still choose to stay on the sidelines waiting for clearer macroeconomic improvements, said Pham Ngoc Bich, managing director of Saigon Securities.

Bich indicated that existing problems with interest rates, corporate governance and public investment were still concerning institutional investors. Moreover, he said that low liquidity – which actually had just “improved” to VND600-700 billion ($29-33.8 million) per session on the HoSE, remained a big obstaclen.