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Stocks will fall deeply?   2008-10-10 - TBKTSG

The stock market has experienced four falling trading sessions so far this month. Meanwhile, experts say that there are signs of further falls in the time to come, and that there is only a 10% chance of the recovery of stock prices this year.  


Investors watching the world’s markets


Investors  are watching the world’s markets


It is clear that the uncertainties in the world’s financial market and US economy have been making Vietnamese investors uncomfortable.


Lam Minh Chanh, Director of Dai Viet Securities Company, said that Vietnam, as a part of the world, will not remain untouched by the global financial market crisis.


Meanwhile, the director of an investment fund has warned that the business results of listed companies in the third and fourth quarters of the year will not be satisfactory and also be a barrier for the recovery of the VN Index in the last months of the year.


Le Dat Chi, a lecturer in the Faculty of Corporate Finance, HCM City Economics University, said that the securities indexes of the markets in the world have been sliding after bad news from the US and then Europe. He said the global economy will continue to be gloomy.


Chi said that the macroeconomy in Vietnam remains unsatisfactory despite the good news about the consumer price index (CPI), trade deficit and money supply. The worries about listed companies’ business results will badly affect share items which have big capitalisation volumes.


“Technical analysis shows that there is a 10% possibility of stock prices recovering. If stock prices do not bounce back on October 8, prices will fall further to a new threshold of 360 points,” he said.


In the latest news, the VN Index on October 8 dropped by another 12.91 points to 401.33 points, the deepest low since July 2008.


However, Chi said that the current stock prices are considered very cheap, and should prompt investors to buy stocks. A higher demand would help the stock market bounce back.


The analysis director of a securities company said that with the everyday trading volume of less than VND800bil it will be very difficult to push the market up. The director also said that the high P/E is really an obstacle for the recovery of the VN Index in the short term. He went on to say that there will not be optimistic signs for the stock market until mid 2009 when the economy becomes stable.


Chanh from Dai Viet Securities Company said that the VN Index will depend on investors. Investors believe that the business results of listed companies are unsatisfactory. Therefore, the only thing that could change their minds now is the increased performances of the world’s stock markets.


No intervention needed


Though experts have given pessimistic forecasts about the world’s and Vietnam’s stock markets in the time to come, they say that no intervention from the government should be made at this moment.


Chi said that administrative orders should not be abused, and that it is necessary to let the market follow economic laws and truly reflect its value.


Vu Bang, Chairman of the State Securities Commission (SSC), said that the watchdog has not made any plans to interfere in the market at this moment.


“SSC is still keeping close watch over the market and it will consider taking necessary measures only if the VN Index nearly falls to the previous low of 366 points,” Bang said.


Bang added that if the VN Index remains around 400 points, this should be understood as the market being stable. The state management agency will take actions only if it sees wide-scale sales and serious problems in liquidity.

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