While securities investors feel depressed about the continued fall of the VN Index, and experts have urged the management agencies to take action to rescue the stock market, the State Securities Commission (SSC) does not think that it is necessary to intervene in the market at this moment.
Nguyen Thanh Ky, Secretary General of the Vietnam Association of Securities Business VASB on May 25, said that VASB has sent proposals to the competent agencies, asking to take necessary measures to rescue the stock market. However, SSC will have to keep a close watch over the market performance for some more trading sessions before making final decision on whether to take actions.
May 25 once again witnessed the sharp fall of stock prices with the VN Index decreasing to 386.36 points, down by 16 points from the previous trading session, the sharpest decrease over the last two years. With the continued decreases in the last 10 consecutive trading sessions, the VN Index has continuously broken the 450-460 and 420-430 point lines and it has been plunging.
Meanwhile, on the same day, the HNX Index, the index for the Hanoi bourse, saw another decrease in the 12th consecutive trading session to 69.01 points, the deepest low so far.
VASB has submitted a 3-point proposal in order to rescue the falling stock market. The association believes that it is necessary to: 1) exempt securities trade taxes on securities companies and investors in 2011; 2) consider exempting or allowing the delays for the payment of different fees and 3) shorten the payment duration to T+2 (Payments will be completed two days after transactions are made).
The information about the proposal submitted to SSC has turned out to be bad news for the stock market. Rumors have been raised that the Hanoi bourse would be shut down if the management agencies do not agree to rescue the stock market, and have made securities investors get panicky. As a result, they tried to bargain away stocks to escape from the market.
Nguyen Doan Hung, Deputy Chair of SSC, still keeps calm about the bad performance of the stock market. He said that the stock market is the “thermometer” of the national economy, and that it is quite normal and understandable why the stock market is gloomy at this moment.
Hung said that Vietnam is pursuing a macroeconomic policy which prioritizes the flight against inflation. The monetary policies have been tightened to serve the policies. Vietnam has to “sacrifice “something to obtain its priority goal: curbing inflation, which explains why the stock market has become lackluster.
“The market is not so bad,” Hung stated, explaining why he does not think intervening the market at this moment is necessary. “At the yesterday’s trading session, the VN Index dropped dramatically, but the liquidity increased. This showed that investors still keep calm. They just consider where to invest”.
Stressing that the stock market truly reflects the situation of the national economy, Hung said that the inflation rate decreased in May, and if a reasonable interest rate policy is applied, the stock market would be “corrected”. Meanwhile, SSC still needs to watch the stock market performance for some more trading sessions before deciding whether to do something to rescue the market.
He emphasized that in case the market becomes chaotic and investors become despaired, will the market need support.
Tran Van Bich from the HCM City Economic Development Research Institute, believes that rescuing the stock market is not a priority for now. He also believes that the stock market fall is the inevitable consequence of the policies on tightening credit.
He has pointed out that if the government takes action to rescue the stock market, this will badly affect the macroeconomic policies and damage the plan to curb inflation.
“It is necessary to decide which should be the priority-rescuing the stock market or tightening the monetary policies,” he said. “When we rescue the stock market, we have to spend money, while this will push up inflation,” he said.