To cope with the overheated Vietnamese stock market, the Ministry of Finance (MoF) and the State Securities Commission (SSC) have announced six measures to control the stock market, helping investors understand and make correct decisions to their investment.
Firstly, under the Prime Minister’s instructions, the limit on foreign holdings in companies listed on the stock market will temporarily remain unchanged at a maximum of 49 per cent.
Secondly, SSC has worked with the State Bank of Vietnam (SBV) to seek coordination in supervising activities relating to loans for securities investment, repo, and securities mortgage by commercial banks. The two authorities will also boost coordination in monitoring inward and outward foreign capital flows related to securities investment.
Thirdly, SSC will send delegations to investigate securities companies currently criticised by investors for unfair performance in executing customer orders or delaying depository services of shares in listed companies. All violations will be settled in conformity with the law.
Fourthly, SSC asks listed companies to quickly announce information on 2006 financial activities in order to help investors have sufficient information for them to make reasonable securities trading decisions.
Fifthly, SSC will require foreign investment funds’ representative offices operating in Vietnam to re-register. These offices have, until now, not been supervised. According to the Securities Law, SSC asks these institutions to re-register with the agency.
At the same time, those authorized to invest in the Vietnamese stock market from foreign accounts must report their investments to the SSC. This regulation is especially applicable for funds set up abroad, but authorising individuals to invest in the local market.
Finally, SSC will strengthen dissemination of public information on the market and securities, enabling people to better understand the market. Especially, SSC will give analysis and evaluation of the market and announce information on financial indices, like price-earning (P/E) ratio, to provide investors with necessary information to make investment decisions.
Following are ideas of experts about this issue:
Mr Tran Xuan Ha, Deputy Minister of Finance: Investors must be very prudent.
The stock market has proven rather hot in recent months; therefore, investors should be very prudent to protect themselves and the market. They should calculate long-term benefits, not only the short-term ones. The equitisation of state-run companies will be continued and there are many good companies to invest in. However, if they do not carefully weigh up the pros and cons, they and the market will suffer negative impacts.
At present, the buying and selling orders are in great quantity and this requires investors to have more accurate information sources. The information is either bad or good; hence, investors should be very careful. The Ministry of Finance is instructing the State Securities Commission to carefully analyse transaction results to orient investors.
Han Ngoc Vu, General Director of VIB Bank: Expectations reappraised.
The recent market growth is beyond expectations of both state management authorities and listed companies. This showed the high expectation of foreign investors in the Vietnamese market as well as its evaluated quality.
Under the roadmap until 2010, we must abide by WTO regulations which stipulate that the capital security index is 8 per cent. In addition, the huge investment for technology systems, networks and product development must be taken into account. This will pressure bank stakeholders because banks have to diversify capital sources on one hand, and disperse capital sources at a larger scale on the other hand. Under such conditions, capital investment and development is a crucial element toward the development of commercial banks.
Quynh Chi
Vietnamese
