A good beginning…

The Vietnamese stock market witnessed a smooth opening trade session in the year of snake, February 18, with the prices of 60 listed shares hitting the ceiling levels, while only 11 shares saw the prices decreasing to the floor levels. 200 shares, or 60 percent of the listed shares on the bourse, increased in prices, including the shares of mining, securities companies and penny stocks.

Especially, the total trading volume soared on the two bourses to 71 million shares in Hanoi, worth VND600 billion, and 70 million in HCM City, worth VND1 trillion.

Another boisterous trading session took place on February 19 with VND1trillion worth of shares transferred just after one hour of opening.

Prior to the Tet holiday, securities investors had many happy weeks when both the VN Index of the HCM City bourse and HNX Index of Hanoi bourse increased continuously by hundreds of percents just within a short time.

Foreign investors continuously poured money into the stock market right after hearing the news that the watchdog agency considers raising the maximum foreign ownership in listed companies.

In January 2013 alone, foreign investors’ net purchase reached VND3 trillion, or $140 million.

Just some days ago, analysts were still cautious when talking about the stock price increases, thinking that the upward trend would last for a short time only. However, the bustling trade sessions with high trading volumes recently have helped change their mine. Both analysts and investors believe that the stock market would bounce back this year.

Stock market recovery to awaken the national economy?

Despite great efforts, no significant signs of economic recovery have been seen so far. A report by the State Bank of Vietnam showed that by the end of January 2013, the credit growth rate had decreased by one percent. Meanwhile, the number of enterprises which got dissolved or stopped operation has increased by 7 percent in comparison with the end of 2012.

Experts think that it would not be a bad choice if the government gathers strength on recovering some key markets, including the real estate and stock markets.

The State Securities Council is considering applying a series of measures to strengthen the stock market, including the ones to provide credit to securities investors, open the door more widely to foreign investors and offer tax incentives, build up derivatives market and improve the share listing quality.

However, experts have also warned that if Vietnam puts overly high hopes on the recovery of the stock market as the driving force to recover the national economy, this would lead to immeasurable consequences.

The investors’ excitement has helped warm up the stock market. However, the extreme stock price increases have also caused worries. A lot of shares, which investors once tried to bargain away because of the big losses of the enterprises, have unexpectedly become expensive.

Though real estate listed firms reported the huge loss of hundreds of billions of dong in the fourth quarter of 2012 and the big inventories of trillions of dong, their shares still have been increasing in recent trading sessions. Forecasting the upward trend of the stock prices, securities investors tend to buy everything they can, while they do not consider the quality of the products they buy. Therefore, analysts have every reason to worry that a new bubble in the stock market may take shape.