Over recent days, the world economy has witnessed fluctuations in the global securities market due to the US economic recession.

How Vietnam will be affected by the fluctuations and what is the future of the Vietnamese capital and financial market in 2008 were the main issues of major concern at a seminar on the 2008 Vietnamese capital and financial market held recently in Hanoi.

The fluctuation of the Vietnamese securities market in recently has been directly attributed to the changes and instabilities of the international financial market.

World economic experts had previously said that the rise and fall of the global securities market had little impact on the domestic stock market but it began to have a serious impact in 2007.

In recent days, the global securities market has fallen by 5-6 percent leading to a sharp fall in the VN-index. The US economic recession along with the bartering away of shares on the global securities market have raised major concerns, esepcially if foreign investors withdraw their capital from the Vietnamese securities market.

Concerning the issue, Deputy Director of the HCM City Securities Trading Centre (HoSTC) said, “Foreign investors will deliberate about the potential of the Vietnamese securities market and the necessity to withdraw their capital before deciding whether to sell their shares or not. Major experienced investors are those who hold large volumes of shares and they never withdraw their capital abruptly.

In regard to the situation in the domestic securities market over the past few days, Director of Anpha Capital Investment Fund Luis Nguyen said that the rapid integration of the Vietnamese economy into the world economy is inevitable. Therefore, the Vietnamese economy as well as its securities market should be well prepared to adapt itself gradually to influences from outside. Policy makers and investors should draw a lesson from the recent depreciation of the global securities market.

Luis Nguyen said that in April 2004, the world’s security market fell sharply, even to 80-90 percent. Many investors, including professional investors fell deeper into crisis. The Vietnamese securities market recently slid to nearly 750 points and domestic investors have never seen such a decrease so are worried. The VN-index is likely to increase again in the near future possible after the traditional Lunar New Year Festival (Tet).

However, Alain Cany, Chairman of the EU Chamber of Commerce in Vietnam said that Vietnam will attract more investment capital soon. The fact is that 25 percent of State-owned enterprises are big groups, which have not yet been equitised while numerous small and medium-sized enterprises have a high demand for capital to expand their production and implement business strategies. Mr Cany added that Vietnam is one of the top five attractive destinations in the world for foreign investors. Not many countries have stable politics, high economic growth and a young population like Vietnam.

2008 will see increasing investment capital inflows into Vietnam. The most important thing is how to improve the capacity of the capital market and the financial market. For example, the country can bring financial and accounting systems up to international standards and complete the legal system to improve the liquidity and transparency of the securities market.

Evaluating the Vietnamese capital market, Brad Levitt, Group Head of Capital Markets for the Standard Chartered Bank said that the Vietnamese capital market is just in its initial development period. In the near future, it will have huge potential market and will attract much more attention from international groups and banks. The Government has achieved a certain amount of success in shaping the long-term development of the market.