Vietnam share slide sparks action

By Nguyen Trung
BBC Vietnamese Service

The government is battling inflation as well as the share slump

Vietnam shares have fallen below a benchmark of 500 points, while markets in Asia and Europe rose strongly.

Vietnam shares dropped for the seventh session in a row, as the government planned to buy in shares to boost confidence in the market.

Analysts fear the VN-Index could slide further from its current trading to below 400 points - a mark last seen three years ago.

The situation has forced the government to step in to halt the fall.

'Confused and embarrassed'

The State Securities Commission is allowing the Ho Chi Minh Stock Exchange to temporarily narrow its share-trading band to 1% from 5% from Thursday.

Since 2003, the commission has imposed a 5% daily trading limit - the amount by which share prices can rise or fall each day.

The other main stock exchange, Hanoi Securities Trading Center, was given the same instructions to cut share trading band to 2% from 10%.

The move received mixed reactions from investors and analysts.

Meanwhile investors continued to leave the fledging market.

"We are confused and embarrassed by short-term measure to keep the market from falling further," said Bui Ngoc Long, an investor in Hanoi.

"We don't know what to do next," he said.

"But we must accept the fact that Vietnam market is quite new to the world, so it's still finding the way."

'Stock bubble'

The VN-Index was gaining momentum in 2005, rising to a peak in early 2007 at more than 1,000. It began its steady decline towards the end of the year.

The exceptional stock market conditions attracted a wave of small traders and foreign investors which led to fears of a "stock bubble" bursting.

Vietnam has one of the highest economic growth rates in Asia - 8.5% in 2007.

But inefficient macroeconomic measures have left the country reeling from its highest inflation in decades.

The government has introduced ways to tackle inflation which include tightening the monetary policies.