BÁO CÁO BMI MỚI NHẤT DỰ ĐOÁN INDEX VỀ 225

BÁO CÁO BMI MỚI NHẤT DỰ ĐOÁN INDEX VỀ 225

The outlook for the Viet Nam Index (VNI) is still poor, due to the deteriorating global and domestic economy. The equity index, currently trading at 320.33, vies with the Shanghai Composite Index as the worst-performing in Asia, down 66% year-to-date. The index now faces major support at 320.00, a level which we believe could soon be breached. Were that to happen, we see scope for a further decline tom 225.00, which would equate to losses of 30%.

Our economic outlook for Vietnam in 2009 is more bearish, and we expect real GDP growth to slow to 5.0% next year from 6.0% in 2008. This is likely to erode the earnings of major Vietnamese companies. Although the government announced on November 17 that it was granting more listed companies reductions of the order of 50% for two years in corporate taxes, this has failed to resuscitate the market. Nor has the VNI taken relief from the State Bank of Vietnam (SBV)''s latest 100bps rate cut (to 11.00%), announced on November 20.

Meanwhile, the government is tightening rules on Vietnam''s informal ''over the counter'' (OTC) stock market, which it fears is not sufficiently regulated. The OTC market, currently based in Ho Chi Minh City (also the home of the VNI), will move to Hanoi. Daily price moves in the OTC market will be limited to 10% under the new rules, which will also require companies to publish annual reports on their finances. The latter directive is designed to bring greater transparency in order to reduce risks for investors.