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Vietnam’s stock market challenged in 2008
The heyday enjoyed by Vietnam’s stock market in 2007 did not spill over into 2008, the year that gave investors their biggest challenge since they began trading in Vietnamese shares eight years earlier.
The stock market enjoyed its most frenetic activity during 2008’s first session, with the VN-Index reaching a peak of 921.07 points. However, this trend proved to be short-lived and the bourse began to suffer soon after.
The market fell into its gloomiest period on December 10, with the VN-Index plunging to 288.85 points, equal to the nadir reached by the bourse four years earlier.
The fall wiped 70 percent off the value of the bourse and led to investors facing serious and widespread losses.
It also led to a number of rich and experienced foreign investors, who were enthusiastic about the performance of the stock exchange in late 2007, quitting the bourse.
According to the stock market watchdog, foreign investors sold up to 6.9 million shares, worth 62 billion VND, by mid-December.
The bourse’s “gloomy” performance discouraged many businesses against listing or issuing more shares to raise capital.
By the end of 2008, the bourse welcomed the addition of just 76 new companies, bringing the total number of listed companies to 338, consisting of 170 listed on the Ho Chi Minh Stock Exchange and 168 on the Hanoi Stock Exchange.
During the course of the year, the prices of many shares were driven up to levels that far exceeded their real value due to the mindset of short-term investors, who entered the market with the sole intention of making short-term profits.
For those reasons, a number of State-owned enterprises delayed their equitisation plans although they had released their schedules at the start of the year. The Vietnam Bank for Foreign Trade was the only company to launch its first IPO during the final days of 2008.
During the year, the State Securities Commission deployed a series of solutions to stimulate the securities market’s development. However, it could not help the market to work as a channel to raise, store and distribute capital for the national economy.
By the end of November, 2008, the stock market’s capitalisation dropped to 13 billion USD, equivalent to 19 percent of GDP, compared to a rate of 45 percent in 2007.
Economists predicted that the stock market would remain gloomy throughout the first half of 2009 as the national economy continues to struggle against difficulties stemming from the global financial crisis.
They forecast that the market may recover during the second half of the year.
In this context, the Finance Ministry has announced that it will introduce more derivative tools, business bonds and local bonds into the market, attempting to increase the number of suppliers and offer a wider range of choices to investors in order to give a boost to the market./.
Vietnamplus
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