Stock market predicted to recover slightly in 2009

Hanoi (VNA) - This year, Vietnam 's stock market will face numerous difficulties
as a result of the global economic crisis, and may only show small signs of recovery
as the year progresses, according to the State Securities Commission (SSC).

Speaking at a seminar examining the impact of accession to the WTO on the flow of
foreign investment into Vietnam, held in Hanoi on January 9, SSC Vice Chairman
Nguyen Doan Hung said that the stock market is governed and greatly affected by
the macro economy and businesses' operations, which are currently absorbing the
negative impacts of the global economic crisis.

This means that Vietnam will have to overcome more difficulties that will affect
production, import-export, banking and finance activities, indirect investment, and
payment balance, he said, adding that these are the factors that will directly
influence the recovery of the stock market.

To limit these adverse impacts, maintain stability and improve market conditions,
Hung stressed the necessity of implementing a range of simultaneous measures,
including promoting over-the-counter (OTC) and bond transaction markets, making
improvements to infrastructure and technology, as well as increasing levels of
financial transparency.

Besides speeding up the equitisation process to ensure business renovation
programmes can be carried out, creating high-quality products for the stock market,
and attracting investment flow, the country needs to work to improve the financial
capacity of the banking sector through allowing banks to sell their stakes to
foreign partners at rates of less than 5 percent without needing permission from
the central bank, and raising foreign ownership limits in banks to 35 percent, he
added.

Hung also recommended a temporary postponement of imposing personal income tax on
securities investment activities, including taxes levied on revenues, dividends and
bond interests, and suggested the establishment of a fund to support the market when
it plunges beyond a certain level and to stimulate demand when the market shows
signs of recovery.

2008 was the most volatile year yet for the Vietnamese stock market, as the
VN-Index tumbled from 912.07 points in the first trading session of the year to
288.85 points on December 12, a return to the dark financial times experienced
four years ago.

Plummeting stock indexes were followed by a sharp decrease in market liquidity.
Last year, stock market capital accounted for just 17.5 percent of the country's
GDP, and the total capital mobilised through the market reached just 25,000 billion
VND, compared to the 127,000 billion VND mobilised in 2007.-Enditem