Vietnam Stock Index to test a new low in 3 years

The VN-Index hit a three-year low yesterday, while the Ha Noi market hit its lowest level ever, despite the Government's announcement late in the previous trading day that the nation's inflation rate had slowed for a second consecutive month.

The Index yesterday tumbled 8.59 points to close at 311.74, a loss of 2.68 per cent. Trading volume reached 11.74 million shares for a total turnover of VND352.5 billion (US$21.4 million).

The day's trading saw 129 losers and 27 gainers. Demand for shares has fallen sharply this week. Trading value averaged at VND277 billion per day over the first three days of the week, while it was VND483 billion per day during the first half of November, according to HCM City Stock Exchange data.

There was a possibility that the VN-Index would fall to the 300-point mark, said Kim Eng Securities analyst Ken Tai. "It's hard for the domestic stock market to rally in the short term," said Tai, pointing out that local investors were closely following international developments. Tai said the fate of Citigroup would have great impact on the world financial system, and added that he expected the US government would soon pass a rescue plan for the automotive industry, easing a burden the US economy. Declining world steel and petroleum prices were likely to affect the shares of firms that rely on these materials for production, he added.

EuroCapital Securities said in a report that, with the banking and property markets still facing difficulties, the imposition of new income and capital gains taxes on securities at the beginning of 2009 would be further discouraging to investors.

In Ha Noi yesterday, the HASTC-Index hit its lowest level ever, ending the day at 99.56 points, a massive 5.4 per cent loss. About 7.65 million shares changed hands on a turnover of nearly VND197 billion ($12 million).