Viet Nam’s stock market has been so volatile over the first six months of the year 2007 that leading industry analysts remain firmly divided on how the exchanges will react over the final half of the year.
The one constant they have pointed to however is that huge capital investment flows continue to pour into the country unabated as speculators remain upbeat on the prospects of Asia's second fastest growing economy.
On the first VN-Index trading session of the year, many of the market's pundits were forecasting doom and gloom as the Ho Chi Minh City bourse had slumped to 753 points. By March 12, the bourse – the largest in Viet Nam - had rallied to 1,170.67 points recording a 10-week tear that added close to 60 percent of value to the exchange.
Earlier, on March 9, the HaSTC-Index at the Ha Noi Securities Trading Centre sat at a comfortable 454.81 points, but by April 24 the VN-Index had slid to 905.53 points while the HaSTC-Index fell to 284.7 points by the last day of June.
Despite the sharp declines, the VN-Index recorded year-on-year growth of almost 38 percent over the first six months of the year while the HaSTC-Index also increased by nearly 30 percent, said the State Securities Commission (SSC).
The market’s size also expanded beyond the government watchdog's expectations. By the end of June, the market’s value reached 304 trillion VND (20 billion USD) and accounted for 31 percent of the country’s gross domestic product (GDP).
Foreign investors have been at the forefront of the growth and are now the owners of 4,400 of the country's 200,000 trading accounts, a seven fold increase over 2005.
Calming investors fears on the extreme ebbs and flows of the market, Asian Development Bank (ADB) Country Director Ayumi Konishi said in an interview with BBC that that the VN-Index's sharp decline by the end of April was nothing more than a market correction that had been seen in other rapidly developing countries previously.
Backing up Konishi's claims, the Hong Kong-Shanghai Banking Corporation (HSBC) recently reported that foreign investors aren't shying away from Viet Nam as they have now established 46 foreign investment funds, including 23 that have been set up since last November.
The ANZ bank of Australia also announced plans in early July that it would pump 88 million USD into acquiring a 10 percent stakes of Saigon Securities Inc. Earlier, on July 3, Hai Phong Securities Company (Haseco) signed a strategic cooperation contract with the Republic of Korea’s Bridge Securities Company to sell 3.2 million Haseco shares. Haseco plans to increase its chartered capital to 200 billion VND (12.5 million USD).
However analysts are divided into two camps on the impact of recent and in the pipeline initial public offerings (IPO) on the market. Phu My Fertiliser, Insurance giant Bao Viet and PetroVietnam Insurance rolled out issuances during the first half of the year while the Bank for Foreign Trade of Viet Nam (Vietcombank), the Bank for Industrial and Development (BIDV) and the Industrial Commercial Bank of Viet Nam (Incombank) are set to make their first public offerings in the year's second half.
Some pundits believe that a simple increase in supply would trigger a fall in stock prices across the board while others expect the rollouts will create a fresh buzz in the market and attract larger institutional investors to the country.
Vice Director Vo Huu Tuan of Bao Viet said that he believed the market would develop strongly and pointed to the increase in foreign company representative offices in the country, greater foreign stock purchases and an increase of capital into investment funds as primary reasons for growth.
Source: VNA
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