Stock

THE VIETNAMESE STOCK MARKET By Roberta S. Karmel Thirty years ago, I never imagined I would be visiting Vietnam and be warmly welcomed as an American, witnessing a nation enjoying economic growth and increasing prosperity, despite some of the lingering ill effects of Agent Orange in the countryside. Yet, last month, as part of a delegation from the Financial Women’s Association, I had the good fortunate to travel to Vietnam and meet with government officials and others and learn about business developments and Vietnam’s booming stock market. i[i] It is noteworthy that the United States is Vietnam’s top trading partner, and its second biggest investor after Taiwan. Vietnam’s GDP is rising dramatically, its foreign direct investment is rapidly increasing, and its stock market is soaring. On November 7, 2006, Vietnam was officially recognized by the international community as the 150th WTO member. Vietnam is Asia’s second fastest growing economy after China, and it has been forecast that Vietnam will become the world’s 17th largest economy by 2025. Although the country has been a oneparty communist state since 1976, Vietnam has eased restrictions on private enterprise and is selling off many state owned enterprises (“SOEs”) to the public. These offerings are not referred to as “privatizations” for ideological reasons, but rather are called “equitizations.” In 1986, Vietnam launched the Doi Moi (or Renovation) intended to transition the country from a centralized economy to a socialist-oriented market economy. These reforms have borne fruit. In 2006, Vietnam’s stock market index surged 145% and in the first three months of 2007, the index rose another 60%. It should be understood that the Vietnamese stock

market started from a very low base of 22 listed companies two years ago with a market capitalization of $144 million. Confronted by such a hot stock market, the government authorities are trying to cool the market without discouraging foreign investment, but one