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SSC aims for a healthy market in ‘08
Vu Bang, Chairman of the State Securities Commission (SSC), said the two most important tasks in 2008 are improving securities supply and stimulating demand.
What were the most outstanding characteristics of the stock market in 2007?
The most outstanding feature was that the bourse became an effective channel to mobilize long-term capital for the national economy. Statistics showed that the total capital mobilized through share auctions and issuances in 2007 was VND80-90tril ($5bil), triple that of 2006.
The second most important feature was that the scale of the market grew very rapidly with total trading volume up by three times compared to 2006. The market capitalization volume by the end of 2006 reached 22.7% of the year’s GDP, while the market capitalization volume of 2007 reached 46-47% of 2006’s GDP and 39.4% of 2007’s GDP. .
What will be the top priorities of the SSC in terms of stock market management operations?
Technology. SSC is planning to apply technologies internationally applied by both stock markets and companies.
Also, SSC will focus on improving supervision and inspection capability. This is very important, especially during times of rapid and unsafe development. It is expected that the supervision committee, responsible for supervising market operations will begin its work in the first quarter of 2008.
You have mentioned two important tasks in 2008, increasing commodities supplies and stimulating the demand. Could you please elaborate on these?
The equitization of big corporations will help bring valuable commodities to the market. However, we well understand that it is necessary to pay appropriate attention to stimulating the demand as well in order to ensure the market operates healthily. This is difficult when the domestic demand remains limited.
We have several ideas to stimulate the demand.
First, encouraging foreign investments. Second, expanding investment funds. Third, applying suitable tax policies. Recently, the Ministry of Finance has announced it will delay collecting personal income tax from the earnings from securities investments.
Please tell me the SSC’s official viewpoint on foreign capital control?
We have not engagingly managed foreign portfolio investment so far. However, we are trying to manage the foreign capital inflow by requiring more detailed and transparent reports. I think that in order to have suitable policies to control the foreign capital inflow, we first need to better understand the capital inflow and outflow.
Some experts have advised using measures now being applied by other countries, including the scheme on licensing foreign investments. However, I think that Vietnam should remain cautious regarding controlling foreign investment capital; and it needs to avoid measures that may shock the market.
What is the SSC doing to prepare for an even greater amount of foreign capital this year?
What is most important is a healthy economy. For example, when your body is healthy, you will be more capable of absorbing foreign investment capital effectively. Foreign investors only withdraw money only when they see the national economy as unhealthy.
As for the stock market, transparency and advanced technologies will be the factors most important in attracting foreign investors. Foreign investors will inject money in a sustainable market with high liquidity.
Moreover, I think that we still need to discuss how to absorb foreign investment capital most effectively. It is clear that the low capability of capital absorption will do harm to the national economy; particularly, it will put extreme pressure on inflation. However, I think that the problem needs the joint efforts of all relevant ministries and branches.
VNN
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