Happy birthday … not!

In July, the stock market welcomed its 6th birthday as stock prices continued to plummet. The VN index marked the event with a bleep on its chart: It rose 4.16% on July 20, but the small gain was quickly overwhelmed by the downward momentum.

Between July 1 and 31, the index lost another 18% and temporarily dipped to the 399.8 point on Aug. 2.
The quick fall in the VN index after months of hyper growth caught investors off guard. Many  suffered significant losses as prices tumbled at average 30% from the April peak. Demand for stock withered away as investors left the market to lick their wounds.

A roller coaster ride

Vietnam’s stock market with its high level of volatility is not for the faint hearted. The VN-Index shot up over 100% in the first 4 months of this year to fall by more than a third between May and July. And just as many investors are hastily getting off the roller coaster ride fearing an imminent crash, the market made an impressive comeback, advancing 25% since August. The current recovery already ignited hopes that the hyper growth trajectory will soon be realized yet again.

The surest sign that the market has been revitalized is the intense interest shown in the IPO of the Petroleum Technical Service Company (PTSC), one of the leading companies in the petroleum sector.

October is a quiet month (VN index made no advance between October 2 and 23), but there is no reason to fear. The transition period is over and the market is settling at the new height. The past might still matter but  history is in the making.

The recovery phase that started since August is  losing its steam. The VN index met great resistance since the second half of September after passing  500 points: it reached the four month peak of 541.91 on Oct 4 but fell back to 525.92 on the 23rd. At the time of writing, the market has made no advance this month (October).

APEC’s influence

As thousands of CEOs from leading corporations in the Asia-Pacific region and leaders of the APEC economies gathered in Hanoi, the stock market had the strongest rally in months.

The market opened at 521.38 on November 1, then by the time President Bush visited the HCM exchange  on November 20, where he opened the day’s trading, shook hands with traders and met with a group of American and Vietnamese business leaders, the index soared and reached 636.95 on the November 23, the highest point ever.  The previous record was at 632.69 points set on April 25.