Ktetaichinh’s Blog

December 30, 2009

Vietnam to Boost Liquidity by Easing Trading Rules (Update1)

Filed under: Uncategorized — ktetaichinh @ 5:17 pm
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By Nguyen Kieu Giang

Dec. 30 (Bloomberg) — Vietnam plans to boost stocks liquidity by loosening restrictions on the sale of equities next month, said Vu Bang, chairman of the State Securities Commission.

The regulator will reduce by one day the minimum period in which buyers have to hold onto shares before selling them, the regulator said in an interview in Hanoi today. Currently, buyers need to wait three days for the purchases to clear before they’re able to sell the shares.

“Investors will be able to trade at a much quicker pace because of the shorter time period,” said Le Van Minh, director of the Ho Chi Minh City branch of Agribank Securities Joint- Stock Co. “This is a really good measure for investors.”

The regulator is trying to increase trading volume in the VN Index, Asia’s worst-performing benchmark index this quarter, after the government tightened bank lending to combat quickening inflation.

“It will increase liquidity in the market,” Bang said. “Although there are still some difficulties facing the economy next year, such as the high trade deficit, the risks of inflation or tighter credit growth, generally speaking, the outlook for the stock market will be more positive.”

The government is also considering allowing investors to buy and sell stocks in the same trading session, according to Bang. He declined to indicate any timeframe for that change.

Second Monthly Drop

Vietnam stocks are heading for a second monthly decline after State Bank of Vietnam Governor Nguyen Van Giau on Nov. 25 said he would raise interest rates for the first time since June 2008. The measure has dropped 21 percent from a 19-month high of 624.10 on Oct. 22. It rose 2.3 percent to 495.36 today, the highest since Dec. 7.

The government raised about 30 trillion dong ($1.62 billion) by selling securities through the stock market this year, slightly higher than 29 trillion dong in 2008, Bang estimated.

Consumer prices gained 6.52 percent this month, the quickest gain since April, as food prices rose and domestic demand picked up. Inflation has accelerated for four straight months after the government kept interest rates unchanged from January to meet its gross domestic product growth target.

“The target of reaching GDP growth of 6.5 percent next year is reasonable and reachable as the global economy is recovering and those factors will definitely support the local stock market,” Bang said.

The VN Index is still heading for its biggest yearly gain since 2006, advancing 57 percent, as the government subsidized loans and deferred tax payments to stimulate the economy, encouraging companies to invest.

Vietnam aims to slow credit growth to 25 percent next year from more than 37.7 percent this year, according to a statement released by the central bank on Dec. 23.

–With assistance from Nguyen Dieu Tu Uyen in Hanoi. Editors: Beth Thomas, Linus Chua

To contact the reporter on this story: Nguyen Kieu Giang in Hanoi at +84-4-3936-6725 or giang1@bloomberg.net

To contact the editor responsible for this story: Linus Chua at +65-6212-1530 or lchua@bloomberg.net

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