The capital influx into the stock market is expected to grow in the Year of the Horse along with innovations in policies and improvements in the macro-economy.

This would boost the benchmark indices on both the bourses. During the January 27 trading, the VN-Index on the Ho Chi Minh City Exchange lost 0.66 percent to close at 556.52 points, while the HNX-Index on the northern bourse gained 0.76 percent to reach 74.22 points.

According to FPT Securities, investors will remain cautious when they return to the market after the nine-day holiday for Tet (the Lunar New Year). The market will resume operations on February 7.

In the short term, the VN-Index will fluctuate in a narrow band of 550-560 points but the market trends will be positive, FPT Securities said.

In the long term, experts forecast that the VN-Index could reach 600 points in the best-case scenario, 550 in the medium-case and 500 points in the worst-case.

The stock market in Vietnam in the last few months of 2013 and in January 2014 witnessed a shift of capital flow from speculative stocks to blue chips with improved liquidity.

Foreign capital was the highlight of blue chips. In December 2013 and January 2014 alone, the net buying value of the foreign investors reached 2.37 trillion VND (1.12 billion USD), reflecting investor confidence in the recovery and development prospects of the stock market of Vietnam.

More room for foreign investors at listed companies was a hot topic over the past few months. Once the regulation was passed, it will boost foreign capital in the stock market, experts said.

The State Securities Commission said that the regulation was under consideration and would be issued soon.

In addition, a series of large State-owned enterprises such as Vietnam Airlines, Vinatex and Vinamotor, which are expected to be equitised or make initial public offerings (IPO) this year, would help improve the equity supply.

The founding of the Vietnam Asset Management Company (VAMC) to handle bad debts is expected to have positive impact on the stock market this year.

In addition, a decree about derivatives, expected to be issued this year, would be another stimulator.-VNA