A Look at Vietnam’s Stock Index
By Christian Fleming
Feb. 9 – The Vietnamese economy took a beating last year when the country’s benchmark VN-Index (Vietnam Stock Index) became the worst performing in the region.
Despite attempts by the government to control the economic slowdown, including six interest rate cuts since October, the economy seems to be slipping towards recession with the VN-Index declining 66 percent in 2008.
In addition to the performance of the VN-Index, Vietnam’s GDP growth in 2008 fell to its lowest level in ten years, portraying a grim outlook for the country in 2009.
Vietnam’s Prime Minister Nguyen Tang Dung has steered far of a laissez-faire approach to the country’s current economic woes. He proposed a US$6 billion stimulus package last December to include provisions for increased government spending and tax cuts.
The optimistic Prime Minister Dung said that, “the economic slowdown will end by May.” While critics remain skeptical towards such a short-run economic turnaround being realized, some leading institutions have more prudently forecasted market recovery to come about towards the latter half of 2009.
Both Saigon Securities Inc. and Bao Viet Securities Co., Vietnam’s first and third largest brokerage firms respectively, have anticipated positive market growth to begin to occur towards the third quarter of 2009.
In the meantime, the current downward slide looks to continue as evident from the index’s 12 percent drop in 2009 (from 315.62 to 281.63 points) heading into the start of the week.
Established in 2000, alongside the inception of the Ho Chi Minh City Securities Trading Center (HoSTC), the VN-Index is a capitalization-weighted index consisting of all the companies listed on the exchange.
In 2007, the HoSTC was renamed and enhanced into the more inclusive Ho Chi Minh Stock Exchange (HOSE) which is now the premier stock exchange of Vietnam.
Subsequently, the institution experienced a profound expansion as the 13 HoSTC members are now but a few among the 177 members of the HOSE as of February 4th. Similarly, confining restrictions over foreign investment have recently been replaced with a somewhat less restrictive system.
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