Why is the stock market slipping?
06/08/2010 - 83 Lượt xem
People usually keep aside large sums of money for the Lunar New Year in the early part of the year, Vietnam's biggest festival.
Shopping, entertainment, traveling, purchase of assets are all done during this period.
Thus, traditionally, there is a lull before and after Tet.
Another reason is the property bubble that is building.
Though no direct correlation has been established between rising property prices and weakening stocks, whenever land prices have risen in recent years, the stock market has slumped.
When there were similar property market rises in 2001 and 2002, the main stock index lost heavily.
Vietcombank's on-now-off-now initial offering public has seen foreign investors move toward the booming Chinese stock market.
US financial wire service Bloomberg has said foreign investors have bid less for the country's largest bank than many local investors predicted.
As a result, the latter are wary of the valuations of listed banks.
The central bank issued a decree last May ordering local lenders to cap their loans against securities at3 percent.
This, according to several analysts, has played a major part in bringing down the stock market.
Finally, a lot of new companies have listed on the stock market while those already listed have been returning repeatedly to the market to raise more funds, thus diluting their equity and bringing more supply into the market than can be absorbed.
Source: ThanhnienNews.
