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SCIC to buy shares to recover stock market
The State Capital Investment Corporation (SCIC) has decided to buy up stock in an effort to stimulate the demand and rescue the stock market from drowning, the State Securities Commission (SSC) announced at a press conference at 11 am today, March 5.
The list of items and the volume of shares SCIC will purchase will be drawn up this afternoon, according to Nguyen Doan Hung, SSC’s Deputy Chairman.
SCIC will buy strong share items with high liquidity, Hung said, adding that SCIC will only buy shares if necessary.
In a dispatch sent to the State Bank of Vietnam, the SSC and relevant branches, signed by Deputy Prime Minister Nguyen Sinh Hung on March 3, the Government asked all relevant agencies to implement urgent and strong measures to curb inflation and develop the real estate and stock markets.
The Ministry of Finance’s primary task is to stabilize and grow the stock market in the long-term. The ministry will create favorable conditions to increase the supply of commodities and set the dates for the equitization and IPOs of major corporations. There will be no limitation on the number of companies listed on the bourse.
The Government’s recent policies have been contrary to investors’ goals and were largely behind the recent decline of the stock market; securities companies sent a petition to the Government on March 4, demanding that measures be taken to rescue the stock market.
Leaders of the SSC met with Minister of Finance Vu Van Ninh and Chairman of SCIC’s management board to discuss measures to implement the Government’s instructions.
Regarding the SCIC’s upcoming share purchase, Hung said this aims to stimulate the demand and restore investor confidence.
However, he stressed that this should be seen as a temporary solution only, and SCIC will only do this in extreme circumstances. Hung said that other measures will be implemented concurrently to this, to help stabilize the market.
The State Bank of Vietnam will continue purchasing foreign currencies. The Ministry of Finance has set up a taskforce responsible for setting up the timetable for big corporations’ IPOs.
At a press conference this morning, SSC’s leaders acknowledged that supply increased considerably in 2007, and that it will more tightly control enterprises’ issuance of additional shares.
Regarding the proposal to temporarily cease transactions, Hung said that there is no need to stop transactions at this time, since several other measures are being carried out. He added that the market has already shown early positive signs of recovery.
According to Hung, foreign investors’ transaction volume in recent sessions shows that they are purchasing more and limiting sales. International institutions, in their official reports about Vietnam’s financial market, all affirm that Vietnam is still a highly attractive investment address with good macroeconomic indices and consistent performance of listed companies.
Hung has revealed that many investment funds are arranging big sums of capital to be injected in the market. SSC reported nearly VND5tril has been mobilized.
Commenting on the low VN and HASTC Indexes, Hung said that in principle, the two act as a thermometer that diagnoses the health of the national economy. However, the VN and HASTC Indexes are having trouble since listed there aren’t enough listed items to represent the entire national economy. The two indices will represent the national economy only in the future, when more big corporations list on the bourse.
Also according to Hung, the P/E index is now static at 13 and 14, attractive enough to buy.
SSC is now drafting plans aimed at developing the stock market. Investors may be allowed to open more than one transaction account, and they may be allowed to buy or sell the same securities items within one trading session.
100 members of the Vietnam Securities Business Association have agreed to temporarily stop trading shares for themselves.
Many securities investors were present at SSC’s headquarters this morning in Hanoi, where they expressed their concerns over the stock markets’ long decline.
VNN
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