Markets rebound on capital gains tax delay

Markets rebound on capital gains tax delay

The Ho Chi Minh City and Hanoi markets clawed back some of their losses Friday after the government considered delaying the introduction of a new personal income tax law, originally slated to take effect in the new year.

Bloomberg quoted the local media as saying the government may push it back to July 1. Among its provisions is a capital gains tax that would require investors to pay either 0.1 percent of every securities sale or 20 percent of the whole year’s profit. The Ho Chi Minh Stock Exchange’s VN-Index advanced 11.2 points, or 3.69 percent, to close at 314.74 points, its biggest gain in more than three weeks. Hanoi’s HASTC-Index closed above 100 points, the level at which it was set up in March 2005, after staying below it for two days. The index finished the week at 104.2 points, or a 6.75 percent gain from Thursday’s close. In HCMC, the trading volume was nearly 13 million shares as 149 stocks gained, 16 lost, and six remained unchanged. An analyst at a securities company in HCMC, who wished not to be identified, expected the market to fall again next week, partly because foreign investors continue to sell. Though Vietnamese stocks are now cheap, foreign investors see that other markets are even more attractive, he explained. Friday they were net sellers to the tune of VND79 billion (US$4.7 million), dumping Vinamilk, PetroVietnam Fertilizer and Chemicals Corporation, Song Da Urban, Industrial Zone Investment and Development. He also said since the Dow Jones Industrial Average extended its gains into a fourth straight day Wednesday, ahead of Thursday's Thanksgiving Day holiday, it might fall again soon, dampening investors’ confidence in Vietnam. “Investors bought shares today on speculation that the government will continue to cut its key interest rate, introduce measures to stimulate growth, and delay the personal income tax,” Bloomberg quoted Giang Trung Kien, head of the investment analysis department of the Hanoi-based FPT Securities Joint-Stock Company as saying. “The market declined on all but two [days] in the past two weeks to nearly 300 points, and rebounded. It may be a sign that 300 points would be harder to [breach],” he said. “The recovery is, however, not sustainable because... there will be more supply in the market next week.” Steel maker Hoa Phat Group, Vietnam’s ninth-largest listed firm by market value, gained VND1,400, or 4.8 percent, to close at 30,400. The company said in a statement posted on the Ho Chi Minh Stock Exchange’s website it would pay a dividend of VND1,000 per share. Property firm Vincom gained VND500, or 0.62 percent, to close at VND81,000. Chairman Le Khac Hiep has registered to gift more than one million shares, his entire holding, to board member Pham Nhat Vuong. Reported by Thao Vi