Government to support markets

On November 25 Prime Minister Nguyen Tan Dung spoke at the 13th National Assembly Legislature’s second session, saying that Vietnam’s stock markets – the key capital mobilisation channel for enterprises – had been in the doldrums [for a long time] and suitable solutions were needed to support the market’s  recovery.

He gave no specific details but analysts believe this is good news and provides hope for equities investors as this was the first time the prime minister had talked of supporting stock market recovery this year.

“This is beacon of light and investors can hope for a brighter 2012 with numerous opportunities,” Pham Kinh Luan, an independent stock analyst, told VIR.

Luan explained that in 2011 the Vietnamese government had looked directly at the problems the macro economy was facing. By issuing government Resolution 11, the government has shown its determination to stabilise the economy and fix systematic problems, rather than simply pursuing, but unstable growth.

“Resolution 11 was a step in the right direction and now will be further measures. I believe the government will do as it says,” said Luan. He added the government had successfully kept the bank deposit rate ceiling at 14 per cent annually, while stabilising the gold market and directing capital into production this year.

Some optimistic analysts were also hoping for a new stimulus package in late 2011 or early 2012 like the one introduced in 2009 to lower interest rates and support enterprises.

“We should wait to see what happens at the government’s next regular cabinet meeting,” said Duong Hong Ha, chief analyst with Tri Viet Securities.  

In 2009, the government launched an economic stimulus package worth $1 billion in rates subsidies to help enterprises access lower bank rates.  

“I hope the government will have specific measures to help the important stock market recover [as well as property market] to win back investors confidence. If these two markets go bust, the domestic economy could slide back into recession,” said an analyst for the financial website Vietstock.vn.

Vietnam’s main bourse Ho Chi Minh Stock Exchange’s VN-Index has lost around 20 per cent this year after falling 10 per cent in 2010. Meanwhile, the smaller Hanoi Stock Exchange’s has seen even greater falls – over 46 per cent in 2011 and 32 per cent in 2011. This makes it one of the worst performing indexes in the world.