Once booming Vietnam stocks slump

By Grant McCool and Nguyen Nhat Lam

HANOI (Reuters) - Vu Hiep has seen the value of his investment in Vietnam's previously high-flying stock market halve in recent months, but unlike many of his countrymen, he has so far resisted the temptation to bail out.

The Ho Chi Minh Stock Exchange .VNI has begun 2008 as the worst performer in Asia, falling 16 percent last week alone -- a nasty shock for many investors who watched the index rise almost 150 percent in 2006 and 25 percent last year.

"My seven blue-chip stocks are down 50 percent from last year but I cannot afford to sell now because I am a long term investor, not a market surfer," Hiep said at VnDirect Securities brokerage.

A year ago, trading rooms and brokerages were filled with people, despite lack of understanding of the market and poor regulation. Some mortgaged homes to raise money to buy shares. Office workers, housewives and taxi drivers all got into the act.

A crackdown on liquidity by the communist-run government in an effort to control double-digit inflation sparked panic selling by many small local investors last week, sending the index to its lowest since December 2006.

With stock valuations now more attractive and economic growth remaining strong at 8.5 percent, a rebound in the $20 billion (10 billion pound) market could be on the cards.

The index ended Friday down 26 percent for the year, but rose more than 4 percent on Monday, ending at 715.04 points.

"There should be many bargains in the short run given most companies are expecting to keep up robust growth in revenues this year," said Ta Thanh Son, head of investment analysis at Dong A Securities.