Forecasts for Vietnamese stock market

Viet Nam's stock exchange is forecast to continue to grow robustly this year, but it will not develop in an overheated manner as it did in 2006.

Tran Van Dung, Director of the Ha Noi Securities Trading Centre, said the stock market will continue another year of robust growth with the participation of a series of State-owned corporations.

He said the Government's high determination to push up economic growth and accelerate integration into the world's economy will be a catalyst for the development of the stock exchange.

The director forecast, however, that the stock market will not experience a strong development in the first quarter of this year when joint stock companies are on the process of audit or preparing for increasing capital. He said it will be from the second quarter onwards, especially by the end of this year, that the market will begin to develop markedly.

Sharing Director Dung's views, Pham Minh Huong, Chairman of the VN Direct Securities Company, said 2007 will be a year for wise investors, whose knowledge and prudence to avoid risks will help ease the overheated situation in the stock exchange, which will remain a market with great potential.

Other experts predicted that the stock exchange will experience both boom and bust this year rather than develop too quickly as it did the previous year.

On March 1, Viet Nam's stock market index, VN- Index, declined 14.62 points, or 1.29%, to 1,123.07. On March 2, it rose 24.59 points, or 2.19%, to 1,147.66. On March 5, it increased 11.24 points, or 0.98%, to 1,158.9.

Experts said they considered the ups and downs of the stock exchange as an indispensable adjustment, possibly affected by what was happening in the world markets. They added that many investors rely on rumours to buy and sell securities and information on adjustment in the world's stock exchanges impacts their decisions.

The State Securities Commission (SSC) is currently accelerating the process of perfecting a legal system for securities operation, strengthening management machinery and consolidating supervisory operations to ensure that the market develops in a sustainable manner.

The SSC is also focusing on administrative reform and drawing from learning experiences of other countries in resolving problems in case the stock exchange plunges.

SSC President Vu Bang said that the SSC will monitor the stock exchange by letting it adjust itself, not by administrative measures to directly interfere with it. Main solutions will be providing investors with information and coordinating with banks to oversee flows of capital, he said.

The Government has recently announced that it is yet to apply urgent measures to take control of foreign exchange from indirect foreign investment. The announcement partly helped provide stability for foreign investors and warm up the Vietnamese stock market.

Source: VNA