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HSBC has expected that Vietnam's following basic rate increase phase could be conducted in this March and in the whole year, the basic rate could be hiked by four percentage points. HSBC has expected that Vietnam's following basic rate increase phase could be conducted in this March and in the whole year, the basic rate could be hiked by four percentage points.

Vietnam's GDP is in the sustainable impetus, but the problems in the budget overspending and inflation remains being continued this year. HSBC predicted, State Bank of Vietnam will tighten up the monetary policies in 2010.

Vietnamese economy saw a strong recovery throughout 2009 and in Q4 GDP grew by 7.7 percent year-on-year, much higher than GDP growth of Q1, Q2 and Q3 at 3.1 percent, 4.4 percent and 5.2 percent correspondingly.

A lot of business production fields have been restored speedily; particularly the service turnover last year contributed 40 percent to the economy, production sector 25 percent.
Reportedly, Vietnam CPI of January 2010 rose by 7.6 percent year-on-year. HSBC was worried about the continuous increase in consumer demand and prices in 2010. The government has over-spent on infrastructure development, which put a heavy pressure on prices of construction material (that jumped 14 percent in January 2010).

As predicted, the Central Bank could counter with the potential of rising inflation by raising basic rates.

Regarding the Vietnamese stock market, VN Index recently continued tumbling because the liquidity of market remained low. During the last three months, VN Index saw a deep fall compared with some Asian markets.

The average trading value of Hochiminh Stock Exchange plunged to $91 million in 20 days of last December, lower than 58 percent of the average level of November. On Hanoi bourse, the average trading value of 20 days till February 3, 2010 slipped to $44 million.

Because of the correction of stock market in recent time, the number of listed firms with the capitalisation of over $200 million reduced to 24 from 32 of November 2009.
However, foreign investors implemented the net purchase in last December when the finance conference of Euromoney was held in Hanoi. At the conference, 400 of 600 participants are foreigners, showing their more attention to Vietnamese market.
Foreign investors now own 15 percent of stock volume accounting for 8 percent of the market value. The foreign holding ratio in EIB (Eximbank), STB (Sacombank), ST8 and TKU is almost reaching the allowable ceiling limit.

Source: http://www.intellasia.net/news/articles/stock_market/111287064.shtml