Banks shares play important role in VN Index

VNStockNews.com - Bank shares play an important role in the VN Index and HNX-Index. By December 25, six banks listed shares on the two bourses.

According to statistics from Tan Viet Securities Co, among five shares having the highest capitalisation value in the market, four are bank shares, VCB, CTG, ACB and EIG. Regarding the two remaining shares, STB ranks the 10th among Top 10 and SHB ranks 27th among Top 50. The fluctuations of prices of those shares significantly impact the general market. By December 25, the six above bank shares accounted for 26.41 percent of total market capitalisation value. This sector reports the most significant effects on the general market, higher than any other groups of shares.

Accompanied with the recovery of the market, prices of bank shares have sharply increased since the start of the second quarter. From the beginning of April to June, the prices of both ACB and STB have doubled while Vn-Index and HNX-Index have risen by approximate 70 percent. When the market started going down, the price of the two shares also decreased.

Being listed from the end of June, VCB shares were offered for sales at the starting price of 60,000 dong a share, which then reduced in line with the market trend. CTG shares listed on July 16 had the same downtrend with the market.

After Vn-Index fell to 412.88 points on July 20 from 512.46 points on June 9, Vn-Index grew and peaked at 624.1 points within three months later. However, the bank shares challenged patience of investors when in the three straight months, the bank shares mainly went flat with narrow price steps, non-exciting transactions and unclear trend.

Going to the bourse at the time when the market experienced downward corrections at the end of October, EIB, although having chosen the reasonable reference price, failed to escape from the general downtrend of the market. Currently, Vn-Index loses some 20 percent of points against the peak two months ago. The prices of bank shares also reported the similar reduction.

Experts analysed the downtrend of bank shares in different aspects. Firstly, in the traditional terms, credit activities generate almost all profits for banks. In 2009, the credit growth of the whole banking system is limited at 25 percent but the actualised figure is 38 percent. Nevertheless, overall banks have seen no unexpected profit.

That the first demand stimulus package is not extended when the year 2009 ends also restricts credit expansion of banks. At present, there is still no solution for such a maths that deposit interest rates highly increase but lending interest rates are capped. In 2010, high inflation is considered a risk for macro-economic imbalance. It is expected that banks in the upcoming time would find hard to gain high profits.

In addition to the above reason, the opportunity for banks to increase incomes from gold trading, bond trading in the forthcoming time is also relatively narrow. Investors always like sudden change. Lacking surprise factors, bank share prices would hardly increase.

Finally, supply of bank shares are fast raising. Over the last time, many banks have issued bonus shares, convert bonds into shares. Currently, many new banks are applying for listing shares.

However, according to statistics from KimEng Vietnam Securities Co, bank shares are a good indicator for the short-term trend in the market. Namely, when the market goes down, bank shares are stronger, which is an indicator for possible reversion of the market. On the contrary, when the general market increases, bank shares are an important factor posting significant effects on the market trend. Only when bank shares show their relative strengths, the long-term uptrend of the market is really sustainable.