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Vietnam is hottest yet in new year surge

Stock markets keep on rising as the country celebrates the onset of the Year of the Pig. But market participants expect a correction soon and the regulators are eager to ensure that it is a controlled one that does not see off foreign capital. Elliot Wilson reports.

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PHAM MINH HUONG is caught up in something exciting and at the same time rather worrying. "Right now I am standing in the middle of the market, and I can feel the heat," she says. "It has become fashionable to talk about it at every dinner party and it has become so popular even students are participating."

It’s hard to tell at first whether the chairwoman of Ho Chi Minh City-based brokerage and investment bank VNDirect Securities is talking about Vietnam’s red-hot stock markets or the Lunar New Year carnival that’s clattering away behind her but she quickly clarifies her remarks.

"People have forgotten that stocks are so high – for them it’s reasonable," she laments. "They don’t realize the trend is so high. They don’t look at the risk. They only look at how much return they are getting. It’s all about too much easy money."

Her concerns are plain to see. Vietnam’s stock markets rose by more than 50% in the first quarter of 2007, after shooting up 144% in 2006. Precise figures are hard to come by in this still tiny, fragmented market but fund managers estimate that between $5 billion and $6 billion in fresh capital, mostly from foreign institutional investors, has flooded into Vietnam in the past three months alone.