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Vietnam’s gold exchanges may face more scrutiny   2008-09-17 - Bloomberg

A sales woman updates the gold price at 5:30 p.m. Tuesday at a gold shop in a District 1, HCMC.  
Vietnam, the world’s second-largest retail market for gold in the first half, plans to regulate the increasing number of company-backed exchanges that trade the precious metal to boost protection for investors.



“There aren’t any official rules set by the government, therefore investors may face risks,” Dinh Nho Bang, deputy chairman of Vietnam Gold Traders’ Association, said Tuesday. The association has been working with the central bank to draw up new rules, which may be issued by the end of the year, he said.

Demand for gold in Vietnam has jumped as investors seek a haven from slumping stock prices and inflation at its highest in at least 16 years. The country was the second-largest market for retail investment in gold bars in the first half, with imports totaling 62 metric tons, according to the World Gold Council.

“Rules are needed to create a transparent investment environment to protect investors and boost the economy,” said Vo Tri Thanh, a Hanoi-based analyst at the Central Institute for Economic Management. “Gold is normally considered as a kind of safe investment tool in Vietnam.”

Asia Commercial Bank, Vietnam’s biggest listed company by market value, opened the nation’s first gold exchange in May 2007 in Ho Chi Minh City. There are now seven exchanges in total in both Hanoi, the capital, and HCMC, according to a Thoi Bao Kinh Te Vietnam report on Monday.

No regulations

While companies have been “emulating one another” opening exchanges to benefit from “high” volumes and fees, there are no regulations, the association’s Bang said. The Vietnam Gold Traders’ Association has more than 100 members, including banks and gold-trading companies.

Gold for immediate delivery, which surged to a record US$1,032.70 an ounce on March 17, traded at $771.51 an ounce Tuesday.

In Vietnam, the metal traded at VND16.9 million ($1,018) per tael, according to an information service run by state-owned Vietnam Posts and Telecommunications. A tael is a traditional measure equal to about 1.2 ounces.

The government “needs to set standards for the establishment of gold exchanges to assure and protect investors’ interests,” said Huynh Trung Khanh, a consultant in Vietnam for the World Gold Council, the producers’ group.

Vietnam’s stock market has dropped 51 percent so far this year. The country’s central bank, battling surging inflation, has increased the benchmark interest rate three times this year to 14 percent, pushing lending rates as high as 21 percent.

“Most investors have been waiting for regulations because we want to be protected,” said Tran Tien Dung, a Hanoi-based investor on the gold exchange set up by Asia Commercial Bank.

Asia Commercial Bank declined to comment Tuesday on the plans for rules for the exchanges.

Average daily trading volume on Asia Commercial Bank’s gold exchange last month was 304 trillion tael.

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