The global stock market woes cast a pall over
sentiment in Vietnam Thursday, as the VN-Index slumped 3.31 percent, or
11.15 points, to close at 325.74.


The benchmark index is only 12.11 points higher than this year’s low of 313.63.


Trading volume was 15.7 million shares as 142 shares lost, 11 remained unchanged and just 17 gained.


“Vietnam's stock market has been aligned with the US
stock market since the financial crisis began in September,” Bloomberg
quoted Nguyen Sy Thuan, an analyst at the Hanoi-based Vietnam
International Securities Co., known as VISecurities, as saying.


“Investors here wake up in the morning, refer to the
US stock performance, and the VN-Index that day will see the same gain
or drop in the US. This has happened since the credit crisis started.”


Thuan also said the State Bank's rate cut would help
companies in the long term when they need to borrow money. “The rate
cut news will not help the VN-Index to advance strongly right away,” he
said. “Companies are still dependent on the export markets and import
demand from the US, Europe and other countries has dropped. The stock
market may advance slightly.”


The State Bank of Vietnam will cut the key rate and
lower bank reserve requirements to protect the economy from the global
financial meltdown, according to a statement on the central bank’s
website Thursday.


Foreign investors remained net sellers, notching up sales of VND449 million (US$27,000).


Global carnage


World stocks dropped to 5-1/2 year lows and oil hit
22-month troughs as investors reacted to dire Federal Reserve warnings
on the economy and fears about the viability of major US auto makers
and bank giant Citigroup.


Federal Reserve officials slashed economic growth
forecasts through 2009, with the lower range of the Fed's central
tendencies forecasting the US economy could shrink by 0.2 percent.


At least one among household names General Motors
Corp., Ford Motor Co. and Chrysler LLC is at risk of bankruptcy if a
last-minute bailout plan fails.


The plight of US automakers highlighted the increasing
damage which the world's financial crisis is inflicting on the real
economy.


The MSCI world equity index fell 2.3 percent to
197.90, its lowest since May 2003, driven lower in Asia after data
showing Japan's exports to Asia fell for the first time in six years.


European shares also approached their lowest since
June 2003, with the FTSEurofirst 300 index of leading European shares
dropping 3 percent, following losses of 5 percent or more on Wall
Street.


European banks remained under pressure after Citigroup
Inc. faced a crisis of confidence on Wednesday as investors questioned
the survival prospects of the US banking giant.