Risk concerns take gloss off Asia's hottest market
Senior Vietnamese stock exchange official Le Nhi Nang is under no illusions about the mindset - or the potential - of the emerging local investor.
'The characteristic of the Vietnamese is that they like to gamble, they like adventure,' said Mr Nang, deputy director of the Security Trading Centre of Ho Chi Minh City. 'So that means there is a lot of money out there for us to tap.'
At the same time, officials fear for the standards of market knowledge as they try to bring their six-year-old bourse up to international standards. They are particularly concerned about local investors who have leapt into the market during its surge in the past year. 'We do worry, particularly for those who have just entered the market ...We are trying to do more to educate people about the threat of risk,' Mr Nang said.
Those threats have been amplified over the past week as the market slips after 15 hot months that saw it far outstrip emerging market rivals, rising 114.6 per cent in 2006. The market put on further gains as it surged through the New Year, starting to slide on March 12 amid warnings from officials that the market was over-cooked.
The Asian Development Bank added its voice to the concerns over poor investor education. The VN Index recovered on Thursday and Friday after seven days of losses, closing 43 per cent up for the year.
Seasoned investors play down talk of a bubble, however, describing the dip as a welcome correction. Exchanges in Hanoi and Ho Chi Minh City are set to expand as some of Vietnam's biggest state-owned firms list - further attracting foreign investment.
Then there is a view that Vietnam's emerging middle classes have barely entered a market dominated by foreign money.
Mr Nang said his exchange had recorded about 250,000 trading accounts - figures that represent less than 1 per cent of Vietnam's urban population estimated at 35 million.
Chief VinaCapital analyst Fiachra Mac Cana said he remained strongly encouraged by the market's potential. 'The market is at a useful breaking point,' he said. 'It is expensive and corrections may be needed but I don't think it is a bubble.'