"Big risks at the Vietnamese stock market"

“There are latent big risks in the stock market,” Director General of the Bank of Investment and Development of Vietnam (BIDV) Tran Bac Ha said, when describing the stock market.
Mr Ha has called on management authorities to set up a mechanism to ensure the safety of investors and protect them from heavy losses caused by big fluctuations.

Mr Ha said that he could see in the market the alliances of investors that control the market by forcing the prices down and making the prices go up. He cited an example to show that the investors make investment decisions by feeling. Right after the Director of the HCM City Securities Trading Centre Tran Dac Sinh warned about the overly high prices of securities, the market cooled down in the next three transactions and many investors incurred big losses.
“It is the right time to set up the regulations on preventing the controlling of market prices and cornering of the market,” Mr Ha said.

Chairman of the State Securities Commission Vu Bang said that the price increases in March and April, the decreases in July, and then the sharp increases in November and December showed the uncertainty of market transactions. The market is affected by the small-scale market, and the fact that investors mostly make short-term investments.
Mr Bang also expressed his concern about the operation of the free securities market, which he said was not transparent enough and not controllable, and also very risky. The bad operation of the free market can cause the instability of the official securities market and the financial system.

Meanwhile, Director General of Saigon Securities Incorporated (SSI) Nguyen Duy Hung said that a healthy stock market did not rely on foreign demand, while foreign investors were ruling the roost in the Vietnamese stock market. It is a tendency that domestic investors always follow foreign investors in their investment decisions.
Mr Bang said that the stock market should be built in a way so that institutional investors will play the key role in the market’s development, while encouraging the participation of professional institutions like banks, insurance companies, investment funds and securities companies.

The solution of limiting the unofficial market was mentioned as an important way to minimise the risks in the market. The Securities Law stipulates that activities of offering for selling or purchasing securities in small ads on websites are not acceptable.

Meanwhile, Deputy Director of the VF1 fund management company stressed the need to make things transparent in the stock market. “I know some prospectuses that do not have any significance, and in some cases, the prospectus can lead investors far away from what they need to know,” Ms Hong said.

The Ministry of Finance has proposed the application of a mechanism which would allow the State Bank of Vietnam to exchange information and control the forex flow, as well as supervise the operations of credit institutions in securities-related activities.

Source: VNE