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Uneven capital markets growth feared
The growth of Viet Nam's securities market should not overwhelm development of other capital markets, including monetary and credit markets, said Dr. Hansjorg Herr of the Berlin School of Economics, at a recent conference on economic growth models hosted by the National Assembly's Economic Committee.
Capital moved in and out of the stock market very quickly and any negative economic occurences would have a strong, adverse impact on the market and listed companies, Herr said.
Capital raised on the stock market was always re-dedicated to business growth, he said.
"The stock market still has the characteristics of a casino, and governing bodies must develop regulations to discipline it and minimise its possible negative impacts on the economy," Herr said.
However, State Securities Commission Deputy Chairwoman Vu Thi Kim Lien said the stock market had become an effective channel to mobilise capital, particularly in times of tight credit.
"This year, the stock market had to deal with high capital demands from both companies facing difficulties in borrowing money from banks, and banks needing to raise capital to meet the State Bank of Viet Nam's stricter capital requirements," Lien said.
Increased mobilisation of capital through the stock exchanges could support the credit market as well as help curb inflation, she said.
Capitalisation of the Vietnamese stock market amounted to only 40 per cent of GDP, while this figure could reach 150 per cent of GDP in Malaysia, with a longer history of development in financial markets.
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