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The SCIC mystery
SCIC, the State Capital Investment Corporation, was announced would act as the tool of the state to rescue the stock market from drowning. However, the role of the corporation remains dim, and the corporation’s actions remain mysterious.
At the Vietnam Business Forum held in Hanoi on June 2, which took place on the threshold of the mid-term Consultative Group Meeting, Dominic Scriven, Director of Dragon Capital, an investment fund management company, said that it is necessary to clarify the role of SCIC, so that investors can well understand the purposes of SCIC’s operations.
He said that SCIC should clearly announce to the public what its purposes are, political or financial.
Questions about the function of SCIC were raised after the corporation was assigned to interfere in the market to rescue the market from falling further. But SCIC has been criticised for taking on too many roles, and the roles contradicting each other. For example, when it intervenes to help stabilise the market, its investment results may suffer.
Several months ago, in an attempt to rescue the falling stock market, the Prime Minister asked SCIC to join the market by purchasing stocks to stimulate demand.
SCIC said that it began purchasing shares listed on Hanoi and HCM City trading floors on March 7, 2008. These are shares of big corporations that have good business performances and high liquidity.
However, the details of the stock purchases made by SCIC have not been made public.
In fact, a question about the volume of shares SCIC has purchased was raised by a National Assembly Deputy at the ongoing session on May 30.
However, Minister of Finance Vu Van Ninh said that the figures related to SCIC’s transactions must be kept secret.
Regarding loss and profit of the purchasing deals, Ninh said that profit and loss can only be calculated when the stocks are sold. Meanwhile, the stock market goes up and down.
Ninh said that announcing the purchased volume with the current condition of the stock market would have bad impacts on the market and on macroeconomic stability.
Meanwhile, doubts have been raised about the power of the powerful corporation. The stock market just went up a little after the corporation joined the market, and it has been sliding since. Therefore, people guess that SCIC is incurring big losses on the purchasing deals.
According to the Steering Committee on Enterprise Renovation and Development, in 2007, SCIC earned turnover of VND1,150bil and profit of VND1,041bil.
Currently, SCIC is managing state capital of VND7,472bil in 845 enterprises.
VNN
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