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Ministry eases stock trading restrictions
The Ministry of Finance has made several changes to stock trading regulations to improve liquidity. Circular 74, which it issued last week and will take effect in August, will lift the ban on investors having more than one account.
It will, among other things, also lift the ban on buying and selling a security in the same session, according to Vu Bang, Chairman of the State Securities Commission.
"The two stock exchanges will be able to make decisions on price fluctuations after the commission's approval," Bang said.
"In case of necessity, the commission will have the right to adjust the price band."
However, the settlement would remain T+3 [three days from the transaction date] due to technical factors, he said.
Though late, the much-anticipated changes are welcome and will have a positive effect on the market that is almost 11 years old but still lacks trading options.
The changes are expected to make the market more transparent since despite being illegal, it is common for investors to have multiple accounts and use margin trading.
"The circular will revive investor confidence and take away the advantage from some securities companies that allow margin trading, creating a fair, competitive environment," Tran Thien Ha, general director of An Phat Securities Company, said.
Once the circular takes effect, he said, investors would be able to save costs and minimise risks.
The new regulations will also enable the market watchdog to monitor the market better.
However, for sustainable growth, the stock market also requires the healthy development of listed companies, transparent corporate governance, and a transparent and favourable legal framework, which are all in the works.
Central bank combats dollarisation
The State Bank of Viet Nam further lowered the interest cap on dollar deposits last Thursday. For deposits by individuals, it is down to 2 per cent from 3 per cent, and for institutions, it has been halved to 0.5 per cent.
The central bank has also ordered lenders to set aside more dollars as reserve for the second time in less than two months, increasing the reserve ratio by 1 percentage point to a range from 4 per cent to 7 per cent, effective this month.
It has also ordered State-owned firms, from July 1, to sell to banks and not deposit foreign currency from exports.
The moves were part of a Government programme to combat dollarisation, Le Xuan Nghia, deputy head of the National Financial Supervisory Council, said.
The central bank hoped to create the impression that foreign exchange deposits were no longer welcome at banks so that depositors would switch from the greenback to the dong, he said.
Le Tham Duong, Head of the HCM City Banking University's business management faculty, said the dollar lending rate would go up due to the higher reserve rate, narrowing the gap between dong and dollar lending rates, making borrowers less eager for dollars.
The lower dollar deposit rates would also help banks mobilise more dong deposits.
Dr Tran Du Lich, member of the National Monetary Policy Consultancy Council, however warned that dong deposit and lending interest rates would not immediately benefit since they also depended on inflation trends.
Firms focus on social responsibility
Recent Grant Thornton's International Business Report shows that businesses remain focused on the importance of corporate social responsibility (CSR) for branding, securing key staff, and winning contracts.
Around 56 per cent of businesses cite public attitudes/brand building and recruitment/retention of staff as the key drivers this year, highlighting the importance of public opinion in shaping business' CSR priorities.
As businesses in mature markets continue to grapple with sluggish growth, those in emerging economies appear most concerned with reducing their impact on the environment.
For Vietnamese businesses, improving public attitudes towards brands is seen as most important by 93 per cent of respondents.
This is followed by investor relations at 89 per cent and staff recruitment and retention at 86 per cent.
Kenneth Atkinson, managing partner of Grant Thornton Viet Nam, said: "Looking at the data in detail, as an emerging economy, Viet Nam is at the forefront of its ASEAN neighbours in developing a very optimistic attitude to corporate social responsibility (CSR). Whilst mature economies are continuing the struggle to rebuild businesses after the economic downturn, Viet Nam can take comfort from its GDP growth position and maintain its progress in developing a positive opinion among its employees, consumers and potential business partners.
"As the country moves towards a more open and transparent business environment, it should take the opportunity of encouraging more complete financial and business reporting.
"Potential investors will have more confidence in an emerging market that shows leadership in implementing socially responsible practices as a contribution to businesses efforts to attract and retain skilled workers, build brand values and appeal to multinationals for which CSR is becoming higher on the supplier/investment selection agenda."
Ed Nusbaum, CEO of Grant Thornton International, said: "In an increasingly crowded and dynamic marketplace, businesses globally are becoming more aware that adopting a proactive approach to wider CSR issues can help them stand out in the minds of employees, consumers, and potential partners.
"Moreover, as businesses and, indeed, consumers, in mature economies struggle with the fallout from the economic downturn, altruistic concerns over the environment have been forced into a backseat role.
"Businesses are focusing on the bottom line and consumers are looking for ways to make declining real disposable incomes go further.
"That said, businesses in emerging markets, as we have seen with the wider global economy, appear ready to take the initiative in driving the CSR agenda forward."
Meanwhile, levels of CSR activity undertaken in relation to the environment, workforce and wider community vary significantly across the globe. Businesses in northern Europe and southern Africa, together with much of North America and the Asia-Pacific region, lead the way in initiating socially responsible practices, with those in mainland Europe lagging behind.
Viet Nam does not see CSR as a "Save the Planet" issue but as a much wider commercial and people subject, according to the report.
vietnamnet, VNS
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