The VN-Index ended the year 2008 down 65.95 per cent from the end of the previous year, closing at 315.62 points.


Many securities analysts believed that 2008 was the
year the chickens came home to roost for a market that had exploded
with hotter-than-expected growth for two years.


"The growth of the stock market during 2006-07 made
people forget the fact that with money, it's easy come, easy goes,"
said John Nolan, an analyst for a HCM City-based fund management
company.


"By the end of 2007, the market began signalling a
subtle trend of tottering and falling," said Huy Nam, an independent
analyst and author of books on securities investment. "But everyone on
the market, even I - an analyst - still believed that the fall was
short and insignificant."


So firms kept listing, offering shares at high prices
as other firms had done before, Nam said, while investors began
reacting differently. Vietcombank's much-vaunted initial public
offering was an early warning of troubles ahead.


Early in the year, the market was plunging, and regulators moved to slow the descent.


"Never before has there been harsh intervention into
the market like this year, with a tightened trading band on both
bourses, the interjection of the State Capital Investment Corporation,
and the consecutive issuance of price stabilising policies," said Hoang
Van Quyen, head of the analysis department at Tan Viet Securities Co.


Volumes plummet


EuroCapital Securities figured that capitalisation of
the stock market fell by VND270 trillion (about US$16 billion). The
average value of trading in each session fell to VND462.7 billion in
HCM City.


By the end of the year, the global financial crisis
was driving down the values of shares everywhere, and the Vietnamese
market was no exception despite attempts by the Government and market
regulators to reassure investors that Viet Nam would not suffer a
significant impact from it.


An obvious clue, however, was a massive shift by
foreign investors away from being net buyers on the market to being net
sellers in most sessions.


"If you kept an eye on it, you began to realise that
the dollar value of the sales ... meant that foreigners had begun
withdrawing their capital from our market," said Hoang Thanh, an
investor with VPBank Securities.


"It's understandable that a soldier has to fight for
his own country, but the situation would not have been considered too
bad if the foreigners' sell-off had not begun to draw too much
attention," said Hoang Quyen, an investor with VNDirect Securities.


Some investors reassured themselves with the thought
that many foreign strategic investors, responsible for as much as 80
per cent of foreign holdings on the stock market, had pledged to
maintain their investments in Viet Nam for at least five years.



[table]



Last week on the market





Active
trading in the final two trading days before the New Year's holiday
lifted the VN-Index last week by 2.92 per cent, to end the week at
313.34.


Technology
shares recorded the highest gains, up 36.37 per cent in value, followed
by shares in public services and tourism, according to FPT Securities.


But
shares in telecommunications were down 4.62 per cent, in household
products, down 3.24 per cent, and in food and beverages, down 2.66 per
cent.


Trading
volume on the HCM City Stock Exchange last week passed 41 million
shares, generating a total value of VND1.04 trillion ($61.17 million),
Sacombank (STB) was the most active on the week, with 3.12 million
shares traded.


Foreigners were net buyers on the week of a net of over 5.4 million shares, worth VND247.4 billion.


In
Ha Noi, the HASTC-Index last week saw a decline of 1.93 per cent to
close at 104.47. A modest volume of 16.8 million shares changed hands
last week, representing a reduction of 34.3 per cent from the previous
week.


Vincom
Securities analysts predicted that the trading this week would continue
to be mixed due to apprehension over the new tax levied on securities
investment income and capital gains.


[/table]
By November, the VN-Index broke below the psychological
barrier of 300 points, and the Government again jumped into the
situation. Looser fiscal policies and a $6 billion stimulus package
were dangled in front of investors to allay the psychological threat of
the global crisis.


By December, the market showed some signs of
stabilising and, perhaps coincidentally, foreigners began returning to
the market at the same time.


Looking to 2009, Nam said: "Nothing goes one way forever."


Tong Minh Tuan, deputy head of the analysis department
at Bao Viet Securities, said that the stock market would keep
struggling in early 2009 because of corporate performance and issues
left over from 2008, such as bad debt.


"The new policies which are considered supportive for
economic factors would take effect in the mid year. By then, the stock
market will recover," Tuan added.


"Investors should go ahead with their investments, but
traders should stand still or move to a longer strategy," said Nolan,
who predicted that the stock market would grow, but not as fast as once
expected. Long-term investment would bring greater benefit than day
trading, he said.


Nam expressed the opinion that domestic investors would
begin trading again if regulators applied derivatives tools such as
margin trading, options or futures contracts.


"The trading will be poor if investors just repeat
buying, holding and selling shares day-by-day. Derivatives allow them
to try their hands with new and interesting systems of trading."


Viet Nam News