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Authorities stand idly by as stock market drowns
The State Securities Commission (SSC) and the Ministry of Finance (MOF) have promised again and again that they would take appropriate measures to ‘rescue’ the stock market. So far, none have been implemented and share prices keep falling.
On January 15, huge numbers of disgruntled investors sold out their shares. The VN Index saw a dramatic decrease of 31.27 points to 808.83; such a sharp fall hasn’t been seen in six months.
Analysts described the January 15 hit as a market retreat, as investors cut their losses, turned heel and ran.
The SSC, MOF and the State Bank of Vietnam promised to take quick and appropriate actions to recover the stock market and many invested their confidence in the above agencies, expecting the VN Index would bounce back. However, state management authorities have been all talk, while around them both investors and the market has been drowning.
Analysts say the stock market’s decline was inevitable and that it will remain lackluster until State management agencies reverse their decision to cap securities lending and take measures to stimulate market demand.
Though recovering the falling Index is urgent, State management agencies are hesitant to take action.
Deputy Head of the Market Development Division under the SSC Nguyen Son, in an interview with local press agencies, said State management agencies are considering reversing their decision on securities loans by amending Decision 03. Meanwhile, Deputy Governor of the State Bank Phung Khac Ke denied these assertions, saying the central bank does not intend to amend the decision.
Analysts say that securities investors have lost confidence in State management agencies; they no longer believe they will take the right kinds of actions to stimulate the market. Resultantly, investors have pulled out their money and are in search of more secure markets.
Investors have decided to inject money in the gold market instead of the bourse, where they expect more return because of recent gold price increases.
Analysts say profits of 5% a day is within reach of gold speculators as prices skyrocket due to oil price increases, global political uncertainty and the weak dollar.
They also say that saving the stock market is in the State’s hands, that it should invest large sums to buy shares and stop price decreases. The State will then be able to sell the shares it buys for a modest but healthy return when the stock market warms up.
Vietnam’s stock market is plagued by a condition where there is a shortage of items to sell when investors have a lot of money, and offers too many when investors do not have enough investment capital.
It is vital for the State to reduce the supply of securities and inject money in the stock market. If action isn’t taken soon, important IPOs will fail and the investment infrastructure will crumble.
VNN
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