Vietnam has imposed a 20% price band on the movement of shares on their first day of trading on the main stock exchange to prevent speculators from manipulating prices. A stock market directive seen by Reuters on Thursday said the price of shares and fund certificates could move only 20% up or down from the starting price set by the firm making its debut on the Ho Chi Minh City exchange.
The trading band ruling approved on Tuesday came ahead of a slew of new listings expected from the second quarter on the Ho Chi Minh City Securities Trading Center, one of the world's fastest-growing stock markets.
Speculators, having bought shares on unregulated markets before the listing, have been taking advantage of the lack of a price band to boost a stock on its debut. Brokers said the band would help limit those gains and the wide price fluctuations.
The price band is part of a directive approved by the State Securities Commission (SSC) market watchdog. The daily trading band of 5% remains unchanged.
The directive will govern trading when the exchange switches on May 7 to continuous matching orders at one of its three daily sessions instead of matching orders at the end of each session.
"The trading band is in place to support the continuous order matching plan as without a band prices can vary widely," a senior SSC official said. "The band will help narrow the price gap".
Unlike stock markets elsewhere, Vietnamese companies conduct IPOs separately from listings, so their IPO price may not reflect the firm's value by the time it makes its exchange debut.
Le Hai Tra, deputy director of the market, told local media that eventually Vietnam would follow international practice and permit corporate IPOs and listings to be made at the same time.
The SSC official declined to comment when asked if the authorities planned more curbs to better manage the stock market, which economists and analysts say is over-heated. The index has risen 33% this year after growing 145% in 2006.
Earlier this year, investors were concerned that Vietnam may impose capital controls to cool the market, but the government said it would not do so.
The watchdog said it wanted to reduce the size of the unregulated markets to protect investors from risks.
It has asked public companies to register with the market regulator and make any announcement via stock market authorities.
Source: Thanh Nien
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