Stock Market in Vietnam in 2009

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Vietnam’s stock market’s recovery puts it among the world leaders for 2009 In 2008, the world economy saw a large recession on the worldwide scale due to the negative influences on the global financial and economic crisis. In the first few months of 2008, world economies faced sky high price increases, which led to the chain of bankruptcy of financial institutions, frozen credit market. Many investors sold off their stock portfolios and looked for less risky assets. MSCI index, the index of emerging economies stocks fell by 60% relative to its peak in Oct, 2007, of which Ukraine index fell by 80%, Rumanian and Bulgarian indices by 75%, Vietnam, China, and India indices by 60%. Although we saw many involvements of most governments and central banks in the financial systems and the economies ( “ money pump”, “ nationalization”, “rescue package”) in the final months of 2008, we expected to see further difficulties to the world economy in 2009, especially the stock markets. The Hong Kong and Shanghai Banking Corporation (HSBC), in its report, ‘Vietnam Monitor’ issued in January 2009, predicted that 2009 would be another difficult year for the regional market in general, and Vietnam’s market in particular. HSBC predicted that the VN Index will be at 300 points by the end of the year and believed that  Vietnam’s stock market has become smaller which does not catch the attention from foreign investors as it did in the past. In 2008, VN Index dropped by 69%, the sharpest fall among the stock markets in Asia. MSCI of Asian market, not including Japan, saw a smaller decrease by 53% in the last year. In the last six weeks of 2008, the MSCI’s markets recovered by 23% while Vietnam’s stock market decreased by 6%.HSBC’s experts believe that Vietnam’s stocks have been weeded out from the investment portfolios of foreign institutional investors. There is no Vietnamese listing company with the market capitalization value of over US $1billion of which foreign investors can purchase more shares. In fact, 2009 can be regarded as the successful recovery of Vietnamese economy. Therefore, I am going to focus on the situation of Vietnam’s stock market in 2009 in my essay, so that you will have a clear picture of the profound changes of Vietnam’s economy from the end of 2008 to the end of 2009. There are three main points in my topic “Vietnam’s stock market’s recovery puts it among the world leaders for 2009”: Vietnam’s securities market overview , some outstanding features of Vietnamese stock market and commentary on 2009. Firstly, we will have a general look at Vietnam’s stock market after the global financial and economic crisis. 2009 can be best remembered as a year of recovery for Vietnamese stock market. Following a 66%drop in the VN Index in 2008, it was certainly a relief to see the markets come back to life. By the end of the first quarter, sentiment turned positive while investment activity as evidenced by retail participation in the stock markets has improved. Thus, from almost falling below the critical 200-point level in February, the market instead rallied after that month and was able to close at 494.77 points by December 31, a 56.76% increase over the previous year. During the year as well, the key benchmark VN Index was able to touch a year high of 633.21 points, up more than 120% versus its year low of 234.66 points reached on 24 February. The return of interest to the market was evidenced as well by an improvement in daily turnover. From a low of about USD 10 million per day in January, turnover increased as investors started to have faith in the market again. After hitting days wherein turnover for shares reached above USD 300 million daily, the year ended on a very strong figure. In 2009, average daily value turnover for the market rose to about USD 90 million daily. Share liquidity ceased to be an issue in 2009 unlike in 2008. .

Recall also that as the pace of...
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