Investors monitor market movements at the office of Bao Viet Securities Company. Investor caution is expected to continue during this week's trading. — VNS Photo Viet ThanhIn the final trading session before last week's Tet (lunar new year) holiday, the nation's stock market suddenly lost ground after nine consecutive sessions of gains.

On the HCM City Stock Exchange, the VN-Index closed before the holiday at 373 points, a loss on the day but an increase of 4.5 per cent over the prior week's close. Meanwhile, on the Ha Noi Stock Exchange, the HNX-Index reached 58.44 points, a gain of 3.9 per cent over the previous week.

Looking ahead to the new trading week, the first week of the lunar new year has not been very satisfactory in the past four years, although active trading in week before Tet might suggest a chaning pattern. Blue chips were expected to continue to lift the market.

However, FPT Securities Co analyst Nguyen Van Quy warned, "Investor caution may continue and trading values are not expected to improve."

Johan Kruimer of HCM Securities Co predicted that the new year would still generate difficulties for the stock market as the banking system was restructured, limiting sources of capital for the market.

On the bright side, however, the market would continue to offer opportunities in the form of undervalued stocks, he suggested.

The primary goal of the Government in the coming year would be to hold inflation below 10 per cent. "Controlling inflation in 2012 will continue to face challenges from such cost-driven factors as electrical rates and fuel prices, as well as the depreciation of the domestic currency and the complex fluctuations of the gold market," said Than Hoang Dung, an analyst for the financial information website vietstock.vn.

Dung forecast that inflation in the early months of this year would continue to slow as it had late last year, but the pace of decrease would in turn slow as policymakers loosened monetary policy. She predicted an inflation rate of 9-11 per cent.

She also predicted that exchange rate pressures would ease, noting that State Bank of Viet Nam Governor Nguyen Van Binh had recently said that the dong would not be devalued this year by more than 3 per cent.

Meanwhile, 20 per cent of listed companies posted losses in the fourth quarter last year, by preliminary estimates, with securities firms particularly hard-hit. Minister of Finance Vuong Dinh Hue has urged a restructuring of the stock market, instructing the State Securities Commission to draft a proposal for establishing the Viet Nam Stock Exchange for submission to Government in the second quarter of this year.

The restructure, to be carried out in co-ordination with banking reform, would be aimed at ensuring the healthy operation of equity and debt markets, thorough oversight and transparency, and adoption of international standards and practices, Hue said. There would also be common criteria for listing, trading, and disclosures, as well as risk management.

Source: VNS