NA action on debt pushes market up

May 24, 2017 | 08:42 AM GMT+7

Shares advanced on Monday on strong support from the banking sector, following a new National Assembly resolution to resolve bad debt.

NA action on debt pushes market up
Benchmark VN-Index up following NA resolution on bad debt resolution. Photo: Internet

The benchmark VN-Index on the HCM Stock Exchange edged up 1.40 per cent to close at 744.10 points.

On the smaller Hà Nội Stock Exchange, the HNX-Index increased 0.58 per cent to end at 92.71 points.

Bank stocks were the biggest gainer on Monday, as eight of nine listed lenders advanced and one remained unchanged. The sector index recorded an average daily growth of 3.64 per cent, data showed.

BIDV (BID) hit the maximum rise of 7 per cent capped for a single trade on the HCM City’s bourse. Other big banks including Vietcombank (VCB), Vietinbank (CTG) and Military Bank (MBB) increased 2-5 per cent.

Two banks on the northern Hà Nội’s exchange, Asia Commercial Bank (ACB) and Sài Gòn-Hà Nội Bank (SHB), leapt 1.6 per cent and 2.9 per cent, respectively.

The entire banking system settled over VNĐ610 trillion (roughly US$27 billion) worth of non-performing loans (NPLs) in the 2012-16 period. Of the total, over 56 per cent were recovered by credit institutions, and the remaining were sold to the Việt Nam Asset Management Company (VAMC), a Government report released at the National Assembly’s meeting on Monday showed.

According to the report, the ratio of bad debts on balance sheet and unsolved bad debts sold to VAMC accounted for 5.8 per cent of total outstanding debts and investment of the banking system in the economy. This ratio would be over 10 per cent with hidden debts included.

The Government has submitted a new resolution on NPLs to the National Assembly for approval, including having domestic and foreign investors involving in this process. This resolution is expected to help remove bottlenecks in solving bad debts.

“Stock market movement today reflected high investor expectations about this issue, as bank stocks surged and led the market,” Trần Hải Yến, a stock analyst at Bảo Việt Securities Co, wrote on a Monday’s report.

If approved by the National Assembly in this meeting session, the bad debt settlement resolution would be enacted shortly and helped speed up the bad debt solving process, Yến said.

The market was bustling on Monday, with a total of nearly VNĐ6.9 trillion ($304 million) flowing in the two exchanges while nearly 366 million shares were changed hands, over two-fold increases over the daily average volume and value seen last week.

Foreign investors lifted their trades with a combined net buy value of nearly VNĐ480 billion in the two markets following the information US-based MSCI Frontier Markets 100 Index raised the proportion of Vietnamese shares in the basket from 8.01 per cent to 12.63 per cent. It is expected this exchange-traded fund will pour about $27.8 million in the Vietnamese market in the coming months.