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Investors call for greater stock market clarity   2009-12-05 - Thanh Nien, Dau Tu Chung Khoan

Foreign investors have suggested more openness from the government and improved transparency from listed firms as measures to lubricate trading on the stock market.


The Capital Markets Working Group (CMWG) said at a recent conference in Hanoi that the government should allow the establishment of different kinds of equity funds, including retirement equity funds, to attract professional investors and to raise market liquidity.

Vietnam should have more portfolio investors for long-term investments, the group said in its report. “Around 60 percent portfolio investors and 40 percent individual investors would suit the Vietnamese market,” it said

Portfolio investors now account for just 10 percent of the market.

They said the government should allow investors that hold more than five percent of shares of a certain stock to conduct trading beyond the daily limit, and to issue special stock exchange boards for foreign investors, which have been used by many countries across the world.

Overseas investors bought a net VND72.3 billion (US$3.9 million) of stocks on the Ho Chi Minh Stock Exchange Thursday as the benchmark VN-Index lost 0.87 percent to close at 494.8, the exchange said on its website.

It said foreign investors have purchased a net VND1.79 trillion worth of shares on the country’s main exchange so far this year, compared with VND5.8 trillion for all of 2008.

On Tuesday, they also bought a net VND34.9 billion ($1.9 million) of stocks on the exchange.

Other changes suggested by the CMWG to concerned government agencies – the Ministry of Finance and the State Securities

Commission – include legalizing margin trading and letting one investor own many accounts at different brokerages.

The group, whose members include the Vietnam Association for Financial Investors, the Vietnam Association of Securities Business, fund management firms such as Dragon Capital, Indochina Capital, and Vietnam’s largest brokerage Saigon Securities Inc., also blamed listed firms for releasing their business results later than scheduled.

Vietnam’s stock market, considered to be in its nascent stages by analysts, has fluctuated many times as investors react warily to a lack of news.

They recommended the government temporarily remove a listed firm from the exchange if it delays announcing its business results more than three times.

Chairman of the group, Dominic Scriven, also managing director of Dragon Capital Group – the largest and most experienced foreign portfolio investor in Vietnam, called for equal taxes for portfolio and individual investors as well as between local and foreign investors.

Tran Xuan Ha, deputy minister of Finance, said the current taxation already guarantees equality between investors. “The problem may just be about complicated procedures. That will be fixed.”

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