Vietnam is now facing challenges in managing the outside capital being poured into the stock market, which is blamed for the overheating, Citigroup economist Renee Chen said.
Renee Chen made the remark at the conference entitled “Vietnam, Challenges from Outside Capital”, co-hosted by Citigroup in Vietnam and the Vietnam Economic Institute, in Hanoi Tuesday.
Strictly speaking, stock market overheating stems from surplus lending from domestic banks and massive investment, not from the increase in real value of securities, Renee Chen noted.
State management bodies of Vietnam should take moderate and indirect measures, instead of abrupt ones, to control it, according to the Citigroup official.
Renee Chen also proposed that measures should be long-term, strategically boosting banking and financial market’s capacity to adapt to massive outside investment.
Meanwhile, Prof-doctor Nguyen Dinh Thien argued Vietnam is gaining more and more benefits from foreign investments, a great chance for the country’s economy to take off in the coming time.
Prof Thien wondered whether domestic businesses can tap this opportunity.
To take full advantage of this, Vietnam must complete the market mechanism and continue improving infrastructure and the capacity of state apparatus, Thien said.
Other Citigroup experts also warned that excess short-term investments in the banking system will stimulate rapid credit development, particularly for securities investments, and inflation.
Vietnam needs to further boost reforms, especially in the banking field and SOEs, stabilizing the Vietnam Dong and flexibly managing the capital market, they suggested.
Yet government officials confirmed that no plans or measures will be adopted to tighten control over and cool down the securities market, where stock prices are inflated 40 per cent compared in 2006. (Vietnam Economic Times, Vietnam Financial Times, VNA)
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