Meanwhile, investors once again began to stay away from the market. The southern bourse saw average daily trades last week of nearly 43.5 million shares, averaging a daily value of VND1.9 trillion (US$102.2 million), a drop of 31.4 per cent from previous week.

"Concerns about inflation governed trading decisions all last week, contributing to driving the Index down," said independent market analyst Nguyen Anh Dung.

Dung blamed rising concerns on assessments published last week by foreign financial institutions which suggested Viet Nam could soon hike its prime rate and that stronger consumer demand leading up to Tet would drive up inflation.

"As a result, trading began lacklustre and market moves unfavourable," he said.

Fiachra Mac Cana, head of Research for HCM City Securities Co, said on Friday that the market seemed to be holding its breath for the January inflation data which would be released toward the end of the month.

On the Ha Noi Stock Exchange last week, the HNX-Index also dipped by a cumulative 4.67 per cent to close the week at 171.37 points. Volumes slowed to 27.4 million shares per day, for an average value of VND964 billion ($52.1 million).

Gossip circulated last week about Dragon Capital, a long-standing investment company in Viet Nam, and its plan to liquidate part of its portfolio. The fund executives moved quickly to deny the rumours, but they still had some impact.

"This gossip wouldn’t have bothered the market if investors had had another things to care for," said Dung, noting the calm situation with the domestic economy. "However, the more peaceful it is, the easier it is to shake them up."

Nguyen Tuan of FPT Securities noted that investors seemed itchy and uncertain.

"Market moves haven’t been totally depressed," Tuan said, citing some shares which performed well over the past week and companies that had issued some positive preliminary earnings data.

"The release of more corporate results will continue supporting the market," said Tuan, predicting that the coming week would once again see surges and plunges with the VN-Index ranging between 490 and 520 points.

Maccana noted that tight liquidity in the banking system remained a problem, with net withdrawals being seen so far this month in the Open Market Operations surveys conducted by the State Bank. He felt the market would remain below recent highs until the central bank relaxed its policies.

"Stock markets remain the most obvious investment option now," said Dung, noting that both gold trading and the property market remained frozen. Capital was still flowing into the market, he noted, but at a pace held in check by investor concerns over the economy.

Foreign investors bucked last week’s trend to become net buyers on both stock exchanges last week, picking up a net of 5.7 million shares worth a combined VND265.4 billion ($14.3 million). — VNS