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SSC to hold firm on market trading bands: Chairman
The Chairman of the State Securities Commission, Vu Bang, confirmed on Thursday his agency would not adjust stock trading bands, refuting rumors that the regulator would narrow the bands to cushion the recent stock market plunge.
Viet Nam's stocks recorded the biggest one-day drop since 2001 on Thursday amid escalating East Sea tensions between Viet Nam and China. The VN-Index on the HCM Exchange tumbled nearly 33 points to a 13-year low of 527.09 while the HNX-Index on the Ha Noi bourse lost five points, ending at 71.66.
"If the commission is to adjust the bands every time stock indices fall steeply, it will no longer be a free market but one guided by the invisible hand of State intervention. In fact, it's normal for the market to rise or fall and the SSC will not adjust trading bands at this time," Bang was quoted as saying by the the Thoi bao Kinh te Sai Gon (The Saigon Times) newspaper.
He said it was not easy to predict market developments during this time, but investors should stay calm and avoid making rash and wrong decisions.
"Foreign investors are still buying and there are no signs that they will withdraw capital from the market. So local investors should not worry too much," Bang said.
However, he did not rule out the possibility of intervention in certain unavoidable scenarios.
In a press release on Wednesday, the SSC said Viet Nam's macroeconomic condition was still stable with some positive data emerging: The number of profit-making companies was on the rise and that of loss-making ones declining; foreign indirect investment inflow in the first quarter was nearly doubled the same period last year.
Most international organisations have made positive assessments of the nation's economic recovery, it noted.
Meanwhile, the commission pledged to monitor unusual transactions and issue strict penalties on any manipulative action in the market.
In contrast to local investors' moves on Thursday, foreign investors concluded the session as net buyers on both stock exchanges, picking up nearly 10 million shares worth a combined VND279 billion (US$13.2 million).
Many experts are agreed that local investors over-reacted in Thursday's session, resulting in heavy losses on the two exchanges.
Johan Nevey, general director of HCM Securities Co, said the "collision" on the East Sea could have been the main reason for investors' panic. It could also be that another interest group took advantage of this chance to push down prices and make purchases, he said.
The situation is rendered more serious when a market plunge is followed by securities companies selling shares pledged as collateral (margin stocks), Nevey said.
"I don't think this downturn will last long. The market was affected by temporary information but not by fundamental data. Liquidity remained high, showing that many investors want to bargain."
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