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Stock market expected to steadily develop in 2008
The domestic stock market experienced many ups and downs in 2007. The unbalanced relationship between supply and demand caused market fluctuations and affected investors’ plans. With timely adjustments from the Government and relevant ministries, the market is expected to steadily develop in 2008.
In 2007 the Ho Chi Minh City Stock Exchange (HOSE) and the Hanoi Securities Trading Centre (HASTC) conducted 248 trading sessions each, with the average value of a trading session on the two bourses reaching VND951 billion and VND568 billion, respectively, up nearly 46 percent compared to the 2006 figure.
Ups and downs
The number of trading accounts held by foreign investors increased to nearly 7,900, triple the 2006 figure. Notably, foreign investors held between 25-30 percent of total shares of listed companies and the value of their traded shares made up 18 percent of the two bourses’ total.
Both HOSE and HASTC held 114 auctions of shares, with 765.39 million traded for VND47.3 trillion. All the issuance and auction activities were valued at nearly VND100 trillion, triple the 2006 figure. An additional of 59 companies was licensed to list their shares on the two bourses in 2007, bringing to 253 the total number of listed companies.
At a recent conference to review the stock market’s activities in 2007, Chairman of the State Securities Commission (SSC) Vu Bang said that the market did not completely operate in a stable manner. Despite the fact that the market continued expanding in both scope and scale, the relationship between supply and demand was unbalanced at a time, causing market fluctuations. There were no fundamental solutions to the overheated market, resulting in unwanted developments.
Mr Bang cited one of the reasons behind the imbalance of the stock market, saying a large number of big companies such as the Bank for Foreign Trade of Vietnam (Vietcombank), Phu My Nitrogenous Fertiliser Joint Stock Company and Bao Viet Insurance Corporation launched initial public offerings (IPOs) by the end of the year. Many newly established banks offered promotions to draw a large amount of capital in society, while the overheated development of the real estate and gold markets created a slight drop in capital drawn into the stock market.
The stock market activities were put under strict scrutiny, with 83 individuals and organisations fined for breaking the law. However, listed companies failed to meet the investors’ requirements regarding the content, quality and time they planned to release their financial reports.
According to Mr Bang, the see-sawing of the stock market affected the investors psychologically, requiring them to adjust their investment plans more frequently.
Optimism
At the conference, Mr Bang and other economists predicted that the scale of the stock market would further expand in 2008 and the following years. The value of listed shares on the two bourses is expected to make up 50 percent of the country’s GDP in 2008 and between 60-70 percent by 2010.
Mr Bang said that the SSC will work closely with the Ministry of Finance, the State Bank of Vietnam and relevant ministries to ensure a balance between supply and demand and establish a securities trading market for unlisted companies along with the bonds market.
In his opinion, the stock market will see no ‘bubble’ phenomenon in 2008 and 2009 as it experienced in 2007 and investors will have a good chance to get shares at reasonable prices.
The Prime Minister has asked the SSC, the Ministry of Finance and the State Bank of Vietnam to adopt solutions for restoring the market, which is expected to grow and flourish in a stable manner in 2008.
VOV
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