Fledgling stock market suffers f
Fledgling stock market suffers from lack of
vision in investments and limited market size are acting to destabilize
Vietnam�s rapidly growing but fledgling stock market, experts have said.
Speaking at conference on the 2007 securities market development Wednesday, Tran
Bac Ha, general director of Bank for Investment and Development of Vietnam said
that the volatile bourse suffered from a lack on vision by domestic investors.
said the bourse plunge late last month for three straight days, with a warning
from the Ho Chi Minh Securities Trading Center that the market was overheating.
Numerous inexperienced investors suffered big losses as a result.
Sharing the same view Vu Bang, chairman of the State Securities Commission (SSC)
pointed out that the heavyweight shares unexpectedly skyrocketed last March and
April, plummeted last July, only to head skyward again in the last two months.
called it a classic demonstration of unprofessional transactions and
inconsistency in the securities market.
also added that an undermanaged unofficial market promised high risk and caused
insecurity for the official market and the finance system as well.
Nguyen Duy Hung, general director of Saigon Securities Corp., affirmed that a
stable stock market should not be heavily dependent on foreign investors.
Sessions saw securities prices up when foreign investors increased speculation,
and domestic investors would sell en masse upon seeing foreigners doing so.
planed to build up an organized investor base, key players in the market to
ensure steady performance, Bang said.
would have incentive policies for professional investment institutions to join
the market such as banks, investment fund managers and insurance.
Particularly, restrictions on participation of foreign investors in the bourse
would be eased in tune with the Investment Law and WTO rules.
Other experts urged the government to take drastic measures to carry out plans
to sell off shares in state firms in 2006-10 and convert foreign-invested firms
into shareholder-controlled concerns via share auctions.
emphasized that the prolonged public share auctions of state giants would cause
ineffective selling state holdings.
stock market capitalization is set to amount to US$30-40 billion by 2010,
accounting for between 30 and 40 percent of the country�s gross domestic product
year alone, market capitalization is projected at nearly 30 percent of GDP,
currently $60 billion.
Ho Chi Minh City Securities Trading Center is set to become a limited company
for the first time and go public by 2010.
Hanoi Securities Trading Center is a limited company owned by the state.
SSC has allowed the two securities trading centers to issue listing licenses.
Companies expecting to trade shares in the stock market will have to submit
applications to these centers instead of the SSC.
HCMC market is home to 108 listed stocks including two funds, and the Hanoi
bourse has 87 corporations trading shares.
two centers� market capitalization totals $15 billion, or 25 percent of the GDP.
monetary market will continue to be stable this year with interest rates
under control, and the central bank will maintain its policy to keep
inflation below the growth rate, the bank governor said.
Le Duc Thuy also forecast at a press conference in Hanoi Wednesday that the
range of dollar/dong exchange rate would fluctuate within 1 percent.
international monetary market would leave lesser impacts on local market
this year than it did in the last two consecutive years, he added.
central bank, officially known as the State Bank of Vietnam (SBV), forecast
that credits would post a growth rate of between 20-21 percent this year and
the Vietnamese dong would not be devalued further thanks to a dynamic
economy and increasing supply of hard currencies.
the forecast, Thuy said SBV would continue to pursue a �careful but
flexible� monetary policy in order to keep inflation below the growth rate,
a target set forth by the legislative National Assembly.
new member of the World Trade Organization, has allowed foreign banks to
establish subsidiary banks in the country, a move that will make the
financial-banking market more active.
Thuy said the SBV had already received 10 applications for opening branches,
representative offices and wholly-foreign owned banks from giant
financial-banking groups around the world.