Shares fell steeply on March 2, with over 81 percent of codes on both national stock exchanges losing value, although market volume improved as bottom-catching buys increased.

On the HCM City Stock Exchange, the VN-Index closed down 1.78 percent from the previous session to 457.83 points. The value of trades reached 974.6 billion VND (46.4 million USD), an increase of 67 percent over the previous day's session, while the volume nearly doubled to 46.6 million shares.

On the Hanoi Stock Exchange, the HNX-Index lost a whopping 4.19 percent of its value to close at just 91.17 points. Value was over twice March 1's level, reaching 765.5 billion VND (36.5 million USD) on a volume of nearly 54 million shares.

Decliners outnumbered advancers by 289-25.

With words circulating around the market yesterday morning that Kim Long Securities Co (KLS) would change its business model and abandon brokerage services, nearly 6.6 million KLS shares were unloaded, making it the most-active share nationwide.

KLS declined by 6.2 percent to close at 12,200 VND.

The slump of KLS also negatively affected other shares in the securities sector. VNDirect Securities Co (VND) and Click&Phone Securities (GBS) both dropped to the floor, while Vietinbank Securities (CTS) fell by more than 4 percent and Sai Gon-Hanoi Securities (SHS) fell by 3.7 percent.

The company chairman Ha Hoai Nam affirmed the news on March 2, but he had no idea how the move would impact the market.

Kim Long Securities JSC will change its name and business operations after a shareholder meeting that will be held on March 19.

Under the new name it would focus on real estate, information technology, trading and other services.

Nam said the company had 1.8 trillion VND (86 million USD), mainly in cash, and would be on the lookout for suitable industries.

Nguyen Ba Thanh, head of the SME Securities Co's investment department, said current market declines were largely attributable to the tightening credit picture for securities investors announced last week by the State Bank of Vietnam.

"However, I think investor reactions were a bit extreme," Thanh said. "Investors are worried about reduced cash flows into the stock market, but this really hasn't been the case."

Although commercial banks would reduce lending for non-production sectors such as securities investment to 16 percent of total outstanding loans this year, the amount of loans for securities investment would not necessarily be reduced, as credit growth would still expand by some 20 percent over last year, he said.

"Vietnam's stock market is still a developing market and reflection on information is ineffective. Investors need more time to process information and understand policies accurately."

Financial analyst Nguyen Tri Hieu also said monetary tightening could negatively affect the securities market in the short term, but the priority of allocating capital to production would, in the long term, help stabilise the economy, "creating a solid foudation for the development of the securities market"./.