phuocpham
03-11-2009, 01:43 PM
Vietnam’s benchmark stock index will pare gains that have made it Asia’s second-best performer this year by 20 percent as the government reduces stimulus spending, according to VinaSecurities Joint-Stock Co.
The government will lower the rate of the subsidies to 2 percent, from 4 percent, and extend the program until the end of next year to support economic growth. Parliament has been discussing phasing out loan subsidies and tax exemptions that were introduced to prevent an economic slowdown during the financial crisis.
“The tone of what’s coming out of the National Assembly meeting in Hanoi isn’t good for the stock market,” said Michel Tosto, senior manager for institutional sales at Ho Chi Minh City-based VinaSecurities, the brokerage unit of VinaCapital Group, which has $1.76 billion under management.
China, Taiwan and India this week tightened rules on lending to try to curb stock-market and real-estate speculation. Vietnam is lowering its subsidy because most companies are showing signs of recovering, Nguyen Xuan Phuc, head of the government office, said at a press conference in Hanoi Friday.
The VN Index has gained 86 percent this year, second only to Sri Lanka’s benchmark index, which rallied 98 percent. The Vietnam index rose 1 percent to close at 587.12 Friday.
Liquidity to fall
“Liquidity in the stock market will go away and financials will have a very difficult time,” Tosto said Friday in an interview from Singapore. About 30 percent of the rally in the VN Index was because of loan subsidies, he estimated.
The Southeast Asian nation in January offered about VND17 trillion (US$952 million) in subsidies to encourage banks to lend to companies at preferential interest rates. Vietnamese banks have lent more than VND412 trillion to firms as of Oct. 22 under the government’s loan-subsidy program, the central bank said in a report on Oct. 23 on its Web site.
The government should subsidize some loans only to farmers and companies working on production, infrastructure, education, and health care projects, Lao Dong newspaper reported Thursday, citing Phung Quoc Hien, head of the National Assembly’s Finance and Budget Committee. Hien couldn’t be reached for confirmation.
The government will lower the rate of the subsidies to 2 percent, from 4 percent, and extend the program until the end of next year to support economic growth. Parliament has been discussing phasing out loan subsidies and tax exemptions that were introduced to prevent an economic slowdown during the financial crisis.
“The tone of what’s coming out of the National Assembly meeting in Hanoi isn’t good for the stock market,” said Michel Tosto, senior manager for institutional sales at Ho Chi Minh City-based VinaSecurities, the brokerage unit of VinaCapital Group, which has $1.76 billion under management.
China, Taiwan and India this week tightened rules on lending to try to curb stock-market and real-estate speculation. Vietnam is lowering its subsidy because most companies are showing signs of recovering, Nguyen Xuan Phuc, head of the government office, said at a press conference in Hanoi Friday.
The VN Index has gained 86 percent this year, second only to Sri Lanka’s benchmark index, which rallied 98 percent. The Vietnam index rose 1 percent to close at 587.12 Friday.
Liquidity to fall
“Liquidity in the stock market will go away and financials will have a very difficult time,” Tosto said Friday in an interview from Singapore. About 30 percent of the rally in the VN Index was because of loan subsidies, he estimated.
The Southeast Asian nation in January offered about VND17 trillion (US$952 million) in subsidies to encourage banks to lend to companies at preferential interest rates. Vietnamese banks have lent more than VND412 trillion to firms as of Oct. 22 under the government’s loan-subsidy program, the central bank said in a report on Oct. 23 on its Web site.
The government should subsidize some loans only to farmers and companies working on production, infrastructure, education, and health care projects, Lao Dong newspaper reported Thursday, citing Phung Quoc Hien, head of the National Assembly’s Finance and Budget Committee. Hien couldn’t be reached for confirmation.