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Mooted market reforms fail to improve investor sentiment
The stock market continues to show weaknesses despite official efforts to roll out restructuring plans.
The State Securities Commission has distributed a draft of it measures to restructure securities companies based on rating criteria to be issued next April, with the target of reducing the number of brokerage firms. State-owned enterprises would also be required to disvest from weak securities companies in order to focus investment on their core lines of business.
“The Ministry of Finance has ordered us not to stop at only restructuring securities firms but to reform the market as a whole,” said commission vice chairman Nguyen Doan Hung.
Viet Nam Association of Securities Business chairman Le Van Chau urged a merger between the nation’s two stock exchanges in order to better compete with other stock exchanges in the region.
“The new exchange should be then equitised as soon as possible,” Chau said.
An officer of Vietinbank Securities Co suggested there should be a system for shares to be automatically delisted when they fall below a value of VND5,000 per share for a predetermined number of trading days.
“There are currently over 250 stocks traded under face value,” he said. “If we applied this scheme, sell-offs would be limited.”
Other securities companies were resisting the inflexibility of such changes, however. A proposed rule to increase the standards for a firm to make an initial public offering to three consecutive years of profitability and return-on-equity ratio of 10 per cent has drawn fire, as well as a proposal to split securities companies into brokerage firms and other, separate companies that provide consultancy and underwriting services as well as perform their own investing.
With all of these proposals still being mooted at the draft stage, shares continued to retreat on the nation’s stock exchanges yesterday, with benchmark indices on both the southern and northern bourses declining by over 1 per cent.
On the HCM City Stock Exchange, the VN-Index closed at 377.16 points. The value of trades plunged by over 30.3 per cent from Thursday’s level to a total of only VND438.8 billion (US$20.6 million). The volume of trades fell short of 32 million shares.
Advancers outnumbered decliners by 165-63. Eximbank (EIB) and Sacombank (STB) were the only blue-chip shares to post gains, closing up 0.8 and 0.7 per cent, respectively.
With over 1.5 million shares changing hands, financial conglomerate Ocean Group (OGC) was the most heavily traded stock on the southern bourse. However, it bottomed out to close at just VND8,600.
On the Ha Noi Stock Exchange, the HNX-Index finished yesterday’s session at 61.73 points, a loss of nearly 1.4 per cent from the previous day’s close. Decliners outnumbered advancers by over two-to-one.
The value of trades edged up 4.2 per cent to VND248.5 billion ($11.7 million), while volume topped 26 million shares.
Kim Long Securities (KLS) was again the most-active share, with over 3.9 million changing hands.
Foreign investors were net sellers in HCM City yesterday by a net of VND25.6 billion ($1.2 million), while they were net buyers in Ha Noi by a narrow margin of VND1.2 billion ($56,300).
vietnamnews
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