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Liquidity, investor confidence key to healthy stock market: seminar
Greater liquidity and investor confidence are key to helping the stock market develop, said participants at a seminar held in Ha Noi yesterday by the Viet Nam Association of Securities Businesses.
Loosening the daily trading band on the stock market would help boost liquidity, said Ngo Phuong Chi of Bao Viet Securities Co.
The trading band was now 2 per cent at the HCM City Stock Exchange and 3 per cent at the Ha Noi Securities Trading Centre, limiting dramatic losses but also limiting the potential for investors to realise gains and making the market less attractive as an investment channel.
"With the current trading band the stock market has no liquidity," said Chi. "The band was tightened in March with the aim of relieving the market, but it should be loosened now that investors have become used to market fluctuations."
Chi suggested loosening the bands at least to the previous levels of 5 per cent in Ha Noi and 10 per cent in HCM City.
"Loosening the band now would be a shock to the system, but it’s necessary," said Le Dinh Ngoc, general director of Thang Long Securities. "In a market, buying and selling is more important than seeing the index go up and down."
State Securities Commission vice chairwoman Vu Thi Kim Lien disagreed, however, saying the band should be kept where it was while the economy remained unstable.
Hai Phong Securities Co director Doan Van Minh said the lack of investor confidence was bedeviling the market.
"Now is the time for institutional investors to save the market themselves by buying in."
The Government should have meetings with foreign investors to discuss solutions, Chi said, adding that foreign investor confidence has also fallen considerably due to dim world and domestic economic prospects.
Nguyen Hoang Hai, general secretary of the Viet Nam Association of Financial Investors, said tighter co-operation among Government agencies should be established in order to generate more appropriate policies that harmonise the development of the stock market and the economy.
The Ministry of Finance, the State Bank of Viet Nam and banking and finance associations should meet weekly to discuss measures, he said.
These might include exemptions from corporate income taxes and reductions of transaction fees for securities companies.
VNS
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