Share prices plunged on Sept. 17 as investors continued to be seriously affected by the US financial crisis.


The Ministry of Finance’s adjustment to the price of
diesel, which greatly affects enterprises’ production and business
results, was not confidence-boosting enough to prevent huge sales in
both the Hanoi and HCM City indices.


Diesel was slashed by 450 VND per litre to a price of
between 15,450-15,500 VND (0.936-0.939 USD) on Sept. 16, a day after
Lehman Brothers filed for bankruptcy protection and Merill Lynch agreed
to sell itself to Bank of America.


The HCM Stock Exchange slumped 18.71 points on Sept.
17, or 4.1 percent, to close at 437.24. Trading volume fell by 15
percent to 13.6 million shares, with a total turnover of 517.6 billion
VND (31.37 million USD).


The southern bourse saw 149 losers, with almost all stocks hitting the floor of the regulated trade band.


Three companies considered to be among the top 20
domestic listed firms with the highest credit rating last year, Binh
Dinh Minerals (BMC), the Corporation for Financing and Promoting
Technology (FPT) and Vincom Joint Stock Company (VIC), were no
exception to the downturn. The credit ratings conducted by the Credit
Information Centre and leading global credit-rating corporation
Dun&Bradstreet, were released on Sept. 16.


FPT was the biggest loser, falling 5.2 percent. This
was followed by BMC with 5.05 percent and Hau Giang Pharmaceuticals
(DHG) with 4.95 percent.


Sacombank (STB), however, saw the most active with
2.55 million shares traded, followed by Phu My Fertilisers (DPM) with
1.4 million.


Foreigners bought 2.78 million shares and unloaded
3.46 million, with net sales value slightly narrowed to 35 billion VND
(2.12 million USD) from Sept. 16’s 40.2 billion VND (2.44 million USD).


At Hanoi Securities Trading Centre, the HASTC-Index
slipped 10.34 points, or 6.67 percent, to end at 144.74. About 7.9
million shares changed hands for a total value of 289.6 billion VND
(17.55 million USD).


Asia Commercial Bank (ACB) led the market in terms of trading volume, with 1.45 million shares.


It might take several months to see the true impact on
domestic businesses of the collapse of Lehman Brothers. “However, US
bank collapses and a series of other troubles in the US financial
market have had immediate affects on investors’ psychology,” said Phan
Duc Trung, general director of FPT Capital.


“It’s natural that the market goes down when investors
are concerned, and there is a domino effect in their psychology,” said
Le Dinh Ngoc, general director of Thang Long Securities.


Ngoc said the decline in share prices will not last
long even though the market dropped so deeply over the past week; there
were still positive moves such as the slash in diesel price on Sept. 16.


“In the global recession, financial institutions will
have to revise their investment portfolios as well as investment
strategies; this may lead to adjustments in the investment influx into
the domestic capital market,” said Vo Tri Thanh, an economist from the
Central Institute for Economic Management.


Economic conditions remained uncertain despite some
improvements in inflation, trade deficit and bank liquidity over the
last few months.


The inflation rate is expected to reach 26-29 percent
at the end of this year, and the trade deficit was estimated to reach
around 20 billion USD, said Thanh.


Maintaining economic stability should be priority now, along with keeping investors’ confidence, said Thanh.


Financial institutions should attach special
importance to risk management, while the Ministry of Finance, the State
Bank of Vietnam and the State Securities Commission should tightly
supervise the financial market.


The Asia Development Bank recommended on Sept. 16 that
the Government continue concentrating on curbing inflation until it is
reduced to single-digit levels, rather than focusing on stimulating
growth.


“While global and regional economies are deepening,
high growth in the short term would result in higher inflation and
bigger trade deficit, with the result that the situation would be even
more difficult to deal with in 2009,” said Ayumi Konishi, ADB country
director for Vietnam .