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Foreigners selling stakes but not hitting the road: SSC   2008-10-31 - TBKTVN

Dr Nguyen Son, Head of the Market Development Division under the State Securities Commission, affirmed that foreign investors have been selling stakes but not withdrawing capital from Vietnam.


What is your comment about the actions of domestic investors recently amid the big changes in the world’s market?


Dr Nguyen Son, Head of the Market Development Division under the State Securities Commission

All the happenings in the US, European and Asian markets have had immediate impacts on Vietnam’s market. I think that the reactions of Vietnamese investors, to some extent, have been immoderate.

Though Vietnam has been integrating into the world, its openness to the world remains narrower than other Asian markets. Meanwhile, Vietnamese investors have been acting totally based on the US, European and Japanese markets, and I find it unreasonable.


A lot of domestic investors are puzzled by the large sales of foreign investors. What would you say about that?


Foreign investors have been selling more bonds and high-liquidity shares than they have been purchasing for the last two weeks. This has had impacts on domestic investors’ decisions. Domestic investors think that the large sales mean that foreign investors are withdrawing capital from the market.


Our statistics show that in October, the sales of bonds by foreigners were VND12tril more the value of bonds they purchased, while sales of shares and investment fund certificates have reached VND1,500bil more than purchased so far.


The difference proves to be not really big, at some $1bil. As Vietnam’s foreign currency reserves are relatively big, the $1bil will not have severe impacts on the domestic market.


It is estimated that the current value of foreign investors’ portfolios is over $6bil. In October, the volume of capital withdrawn by foreign investors from Vietnam was not big, estimated at $250mil.


In general, when the global financial market falls into crisis, foreign investors naturally try to control their overseas investments. They try to sell high-liquidity assets and stable assets like bonds, and sell the stocks of big corporations.


However, there still remain long-term investors. And when the market falls, it brings golden opportunities to long-term investors to restructure their investment portfolios.


Investment institutions have said that Vietnam’s stock prices are fairly reasonable.


Investors register to buy cheap stocks

Most investment funds in Vietnam are closed-ended funds, which means that it is impossible to close your investments and quickly withdraw capital from Vietnam. Moreover, the market's liquidity is not high, and it is not a favourable time to convert VND into foreign currencies to transfer abroad.


What does SSC plan to do to help the market recover?


The ongoing falls of the market do not have the same causes as the previous falls which occurred in May; therefore, the measures used to stabilise the market will be different.


SSC has submitted to the Ministry of Finance and Government some groups of measures aiming to help the stock market. We have suggested delaying the collection of personal income tax from securities investors previously planned for 2009, and supervising financial institutions, banks, securities companies.


The technical measures which were once applied for the previous falls, I think, should not be applied now. Every measure has its own advantages and disadvantages. Narrowing the daily trading bands will slow down the price falls, but will affect the market's liquidity, a thing that big investors do not want.


However, if the situation becomes serious, we will have to take necessary measures. SSC has drawn up a risk management and crisis plan.

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