Hanoi - Vietnam's stock market dropped Tuesday for a third straight day as local investors dumped shares on concerns that a large number of new companies will list before the end of the year and dilute prices, a securities analyst said.

The VN-Index fell 7.22 points, or 1.36 per cent, to close at 525.49, the lowest level in two weeks.

Market volume totaled 30 million shares valued at 69.9 million dollars, down from 36.5 million shares at 75.8 million dollars Monday.

"Local investors are starting to worry that many companies are seeking to list on the market," said Dao Viet Anh of FPT Securities in Hanoi. "This causes concerns of price dilution."

Some investors hesitated to buy after local newspapers reported that as many as 40 companies were queuing up to offer shares on the Hanoi and Ho Chi Minh City bourses.

Concerns were also fueled by the State Capital Investment Corp's recent announcement that it planned to sell its stakes in nearly 1,000 state-owned companies.

Vietnam's stock market was the world's best performer in August, but securities analysts have mixed expectations for September.

They said that government measures to stabilize the stock market had their intended effect, but more measures are still needed to stabilize the economy as a whole.

Vietnam's inflation rate hit 28 per cent year-on-year in August, the highest level in 17 years, and the trade deficit is expected to top 20 billion dollars by year end.

"The government has taken measures to prop up the stock market, but those measures are inconsistent, not clear or strong enough, so the market is still volatile," said Nguyen Thanh Thao, head of the securities analysis department at Thien Viet Securities Company.

"Moreover, a number of investors forecast that the third quarter financial reports of listed companies will not meet expectations, so they decided to sell their stocks before they plunge," Thao said. (dpa)