Hanoi (VNS/VNA) - It’s expected tobe a strong September on the local stock market, as investors are maintainingconfidence after positive economic data in August and a period of prolonged netbuying by foreign traders.

The VN-Index on the HCM Stock Exchangeincreased 2.2 percent last week, with gains in four out of total five sessions.The benchmark index has expanded 18.6 percent since the beginning of this year,hitting 788.73 points on September 1.

On the Hanoi Stock Exchange, the HNX-Indexpicked up 1.14 percent last week, closing on September 1 at 103.81 points. Thenorthern market index has climbed 29.6 percent compared to December 30 lastyear.

According to Hoang Thach Lan, head of thePersonal Banking Division at Viet Dragon Securities Company, the market willlikely maintain its upward trend in September, backed by faster creditexpansion in the last four months of this year.

The central bank is considering extendingthe time to implement a new policy regulating the maximum ratio of short-termfunds used for medium- and long-term loans by credit institutions and foreignbranches. This move is expected to ease pressure on the banks that currentlyhave a high ratio, enabling them to increase lending. This is expected to liftcredit growth to 21 percent by year-end, as per the Government’s direction.

Although the Government has stated thatbanks must focus on loaning credit to the production sector and limiting creditin non-production areas such as securities or real estate, Lan said that inreality, it will be difficult to restrain capital from being invested in thestock market.

“Whenever the credit is relaxed, the stockmarket will go up,” Lan told tinnhanhchungkhoan.vn.

In addition, socio-economic figures inAugust showed the upward trend with major indicators including inflation,import-export value, foreign direct investment, industrial production, totalretail sales of goods and services as well as newly-established enterprises allincreasing.

Chairman of the Office of the GovernmentMai Tien Dung said at a regular press meeting in the middle of last week thatthe country’s GDP growth is likely to hit the target of 6.7 percent byyear-end.

“The economic and business figures arestill positive, supporting the upward trend,” said Phan Dung Khanh, head ofinvestment advisory at Maybank Kim Eng Securities Company.

The VN-Index is near its yearly peak of792.98 points recorded on August 7 (also the nine-year highest level). If themarket could surpass this peak and touch the 800-point landmark, the upwardtrend would continue with more sustainability, Khanh said.

However, he noted a sharp decline inliquidity in the weekend session and said if liquidity did not improve, apossibility of a reverse could happen.

Overall liquidity increased last week withan average of 267 million shares worth 4.6 trillion VND (202.6 million USD)being traded per session, up 14.7 percent in volume and 21 percent in valuecompared to the previous session.

Such a sharp increase was partly driven byabnormal trading in FLC Group’s shares. A total of 226 million FLC shares wereexchanged last week, compared to an average of 45.2 million shares traded eachsession.

Stamp of blue chips

According to Nguyen Huu Binh, head ofanalysis at Vietnam Investment Securities Company, the market’s upward trendhas relied heavily on strong performance by large-cap stocks.

Last week, blue chips in the banking,energy, real estate and consumer good sectors alternately led the market. Realestate giants such as VinGroup and FLC Faros Construction Co rallied 11 percentand 15.3 percent, respectively. Big firms like Vinamilk, brewer Sabeco, lenderBIDV and Vietinbank also saw weekly rises.

“However, if the market only depends onsuch large caps, it will be hard to uphold the growth,” Binh said, noting theselarge caps were under high profit-taking selling pressure after a rally.

This happened after a sharp increase inearly August. The VN-Index declined steeply from the peak of 792 points onAugust 7 to 760 points on August 22, he said.

Foreign investors continued to show theirconfidence in the local market, ending August in a net buying position. Theywere responsible for value of 2.64 trillion VND in August, lifting total netbuy value since the beginning of this year to more than 15 trillion VND.

The stock market opens again today afterthe Independence Holiday. – VNA