Vietnam Stock Market to Recover on Tightened Share Issues, Lending Rates Cuts

Vietnam’s stock market, the world’s second worst player after China after the VN-Index has lost 60 per cent so far this year, will likely rebound soon on tightened share issues by market watchdogs and lending rates cuts by local banks near term, stock analysts said Monday.

 

The State Securities Commission has just said on its Web site that it will request all public companies be cautious about plans to issue shares, share-issuing sizes, plans to use proceeds, in order to improve investor confidence in the context of complicated development of global stock and financial markets.

 

“Vietnam has no signs of a financial crisis as everything is normal as usual,” Andy Ho, CEO of VinaCapital Oct 9 told a meeting between the Ho Chi Minh City Stock and investment management funds, banks and securities brokerages.

 

Andy Ho also assured that up to 80 per cent of the foreign investment funds are closed ones and they will invest into Vietnam’s shares in the long-term. VinaCapital is raising funds to invest into local shares.

 

Meanwhile, Director of the exchange Tran Dac Sinh assured local investors that foreigners were not pulling out of the market, they were more cautious and selective in investment decisions. Sinh said that over the past week from Sept 29 to Oct 9, Vietnam’s shares index lost roughly 17 per cent to the benchmark of 397 points from 479 points, the market’s liquidity was relatively reducing and the market value dropped by VND40 trillion (US$2.424 billion).

 

Nguyen Son, head of SSC’s market development department warned that domestic investors should not sell out their shares and SSC is submitting an anti-crisis scheme for the stock market, including tightening control over the indirect foreign investment inflows, the Nguoi Lao Dong (Labor) newspaper.

 

Nguyen Hoang Hai, secretary general of the Vietnam Securities Investment Association attributed the slump of the market this time to overreaction toward domino effects of confidence crisis from the Wall Street and share sales by foreign investors, the paper said.

 

Correlation of Vietnam’s economy with regional and international economies is still limited, therefore it will not be directly impacted from, but indirectly from the global financial crisis. Exports of the Asean country will be hurt as EU and the U.S. are the major export markets, analysts said.

 

Local commercial joint stock banks in Vietnam said they will likely lower lending rates to push down lending rates to 17.7 per cent per annum from this week and next week after the State Bank of Vietnam, the country’s central bank, had raised interest rates of compulsory reserves to 5 per cent, the Young People (Thanh Nien) newspaper said.

 

Nguyen Duc Trung, general director of FPT Capital forecast that Vietnam will absolutely cut dollar lending rates because FED, ECB and central banks of the U.K., Switzerland, China made co-concerted efforts in cutting base rates to save financial and stock markets from the crisis. (Young People, Vietnam Economic Times, VIR)