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SSC: Situation will be more serious if investors lose patience
The State Securities Commission (SSC) on March 25 decided to lower the daily trading band to 2% for the Hanoi Securities Trading Centre (HASTC) and to 1% for the HCM City Stock Exchange (HOSE). Vu Bang, Chairman of the SSC, said this is temporary measure to help investors keep calm, adding that a lot of measures will be taken to rescue the market.
The stock market has been falling down for a long period. What would you say to investors as the representative of the stock market watchdog?
The first and the most important thing I have to say is that investors should keep calm in this situation.
We are facing difficulties, but the difficulties, according to international experts, are just temporary. Vietnam’s national economy is still developing well.
We think that stock prices have decreased to attractive levels with the P/E index hovering around 12. The real prices of many share items have decreased compared to book value. Previously, the gap between real prices and the book value was 3.5-3.7, while it has been narrowed to 1.7-1.8.
Foreign investors are keeping a close watch over the situation to decide when to buy shares. We have found that many institutions, including funds, have begun buying shares.
The Ministry of Finance and SSC have taken several measures to rescue the stock market. However, they don’t seem to be strong enough, and investors are looking forward to stronger and more effective measures. What are the stronger measures?
The stock market does not mean the official market only, but the unofficial market as well.
As per our estimates, the total market capitalisation value (of both official and unofficial markets) is equal to 90-100% of GDP. Therefore, Vietnam’s stock market is considered a small market, which is not worthy of attention.
If the stock market keeps falling down, this will badly affect capital mobilisation, which will influence economic growth and increase inflation. A stable stock market will help create a good investment environment and a good image of Vietnam in renovation.
SSC has submitted to the government several urgent measures to rescue the market. The State Bank will play a very important role in the plans to rescue the stock market.
On the afternoon of March 25, the government spent time listening to a report specifically about the stock market, and on March 28, permanent members of the government will listen to research specifically about the stock market.
SSC has proposed that the government instruct the State Bank of Vietnam to order commercial banks to stop selling mortgaged stocks.
The second measure we have proposed is that the government should consider buying foreign currencies from foreign investors.
The third suggested measure is to create a good mechanism for the State Capital Investment Corporation (SCIC) to buy shares on the market. In fact, SCIC has been purchasing stocks recently, which has helped prevent the market from sliding. However, I think that it is necessary to split the function of intervening in the market and the function of doing business of SCIC.
We are also considering allowing companies to buy treasury stocks. However, the problem lies in the fact that under current laws, companies that buy treasury stocks will only be able to raise chartered capital after six months. Moreover, they have to make announcements about treasury stock purchases seven days before purchasing.
We have proposed the consideration of companies’ treasury stock purchases as a support for the market, not simply the purchases of treasury stocks. Therefore, we need to seek permission from the government for a specific treatment in this case.
What has SSC, within its ability, been doing to rescue the stock market while waiting for the final decision from the government?
SSC has decided that the daily trading band will be +/-2% at HASTC and +/-1% at HOSE as of March 27, instead of 10% and 5% as currently applied.
However, I have to remind you that this is just a temporary measure to calm investors, not a long-term measure. This will help prevent the market from falling sharply after every trading session.
VNN
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