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Small investors oppose expanding trading lot
Ho Chi Minh City Stock Exchange (HOSE)’s proposal to raise the minimum trading lot to 1,000 shares is receiving mixed opinions from market experts and investors.
The proposal was initiated by newly-appointed General Director of HOSE Le Hai Tra as a solution to reduce system overloads which have troubled traders recently.
A 1,000 minimum trading lot will limit the participation of small investors, while the stock market is moving towards fairness and equality, said a budding investor.
“My friends and I, when joining the stock market, only have a few tens to several hundreds of millions of dong, raising the minimum trading lot to 1,000 shares will directly affect our investment capacity,” said individual investor Diep.
“With expensive stocks, we may have to spend hundreds of millions of dong to buy the minimum 1,000 shares,” she said.
According to Diep, the stock market has never had such a chance for growth. New cash flow into the market pushed liquidity to a record high level. However, the new proposal may not only prevent new investors from entering the market but also discourage existing investors.
“The plan to raise the minimum trading lot to 1,000 shares could quickly reduce the number of orders delivered daily on HOSE. However, it will cause frustration among small investors who are directly affected by the plan as they think they are not protected,” said Do Bao Ngoc, Deputy General Director of Kien Thiet Securities Vietnam (CSI).
“This plan, if in place, will affect the rapid development of the stock market under the current favourable conditions, one of which is great interest from global investors,” he said.
“Under the new plan, the most affected are the investors whose trading accounts have VND1 billion or less,” said Nguyen Hoang Hai, Vice Chairman of Viet Nam Association of Financial Investors (VAFI)
According to VAFI statistics, investors whose trading accounts have VND500 million or less account for about 30 per cent of individual investors. Among them, the number of investors participating in the market for the first time (F0 investors) with VND300 - 500 million is numerous.
“Last year, the boom of the stock market was great thanks to the participation of new investors, also known as F0 investors. The market always needs new cash flows but raising the minimum trading lot to 1,000 shares could hinder the investment capacity of investors and cause them to lose money,” Hai said.
Chairman of SSI Securities Corporation Nguyen Duy Hung on his social media account recently gave a more positive view on HOSE’s proposal, saying the trading system would be on the brink of collapse without appropriate measures.
“Raising the minimum trading lot to 1,000 shares is necessary at the moment to keep the system running,” he said, adding when the system upgrading process is completed, the minimum trading lot could be reverted to 10.
Hung said the overload of orders that forces the stock exchange to halt market trading is the result of a rapid-growing stock market that outpaces the processing capacity of the stock market, as such, “a long-term solution is a must,” he said.
Both before and after the Tet holiday, the overload occurred repeatedly on HOSE whenever liquidity in a trading session hit around VND14-17 trillion (US$608-738 million).
The SSC attributed the overload issue on the HOSE to the transaction processing capacity of the stock exchange that limits the number of transactions per day, while a recent surge of orders has exceeded the expectation of the market.
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