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New SBV’s instruction doesn’t bring high hopes to stock market   2012-02-17 - VietNamNet

The central bank’s Instruction No 1 on the monetary policies to be implemented in 2012 does not show any considerable opportunities for the stock market.


After the blue-chip price decreases in the two consecutive trading sessions, the stock price increased again on February 14, thus making people think that the recovery of the stock prices, commencing after Tet holiday, has resumed.

However, securities investors have been told not to expect too much on the stock market in 2012.

Stock market warms up

The VN Index has regained the 400 point threshold, raising a hope about the continued recovery of the stock market.

Many investors think that the upward trend of the VN Index would continue on the good news that the interest rates would be eased soon. The investors keep optimistic about the stock prices also because they see foreign investors purchasing stocks in large quantities.

“In fact, the current factors are supporting the stock price increases, including the controlled inflation, the improved bank liquidity, and the first signals about the interest rate reductions,” said Chung, a securities investor in Hanoi.

Chung also said that the stock prices have fallen down to the deepest low, while macro economic factors are getting better. Therefore, there is nothing that makes the price continue decreasing.

Especially, the stock market in recent days has been warmed up by the information that the Prime Minister has requested to take credit measures to support the stock market.

Opportunities have not come

While some investors keep optimistic about the stock market, others worry that the stock market would fall into another hibernation period.

The worry has been raised after the central bank released the Instruction No 1 on the monetary and credit policies in 2012.

In the instruction, the central bank has allocated credit growth targets to four groups of commercial banks. The first group of banks, which includes healthy banks, can obtain the maximum credit growth rate of 17 percent. The second group, including the ones operating at average level, can have the credit growth rate of 15 percent. The “quota” is 8 percent for the third group, including below-average banks. Meanwhile, the banks belonging to the fourth group, the weak banks, will not be allowed to have credit growth.

The decision shows that the average credit growth rate of the banking system in 2012 would not be high, which shows that the central bank still keeps cautious with the credit policies, and that curbing inflation remains the core problem.

The instruction No 01 has also stipulated that the proportion of loans to be provided to non-encouraged sectors must not be higher than 16 percent of the total outstanding loans. The non-encouraged sectors include the lending to fund securities investments.

As such, it is clear that the State Bank will not rescue the stock market by directly pumping cash into the market.

Stock market may turn gloomy again

Commenting about the new instruction of the central bank, the members of a securities forum in Hanoi noted that the priority task of the government for now is to make the banks’ operation healthier. In order to do that, it is necessary to settle bad debts and not to let new bad debts appear. Meanwhile, the majority of bad debts come from securities and real estate sectors. Therefore, commercial banks would be very cautious when considering providing loans to securities investors.

Therefore, they believe that the market liquidity would decrease. Those, who can see opportunities now, should sell stocks and wait, while those, who do not have stocks in hands, should keep and wait.

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