State-owned companies may buy stocks to support market
Vietnam may ask government companies to buy shares as part of measures to support Asia’s second-worst performing stock market, State Securities Commission Chair Vu Bang said.
The Ministry of Finance last week submitted draft measures to prevent the global stock-market rout from deepening this year’s plunge in Vietnam, Bang said in a telephone interview in Hanoi yesterday. Other possible measures include narrower daily price limits and a temporary trading halt, he said.
“We want to have a very well-prepared plan, but that doesn’t mean that Vietnam is bound to have a crisis,” Bang said. “We want to learn from the experiences of other countries, either when the market is good or bad.”
The HCM City Stock Exchange VN Index has slumped 55% this year as the fastest inflation in at least 16 years forced the central bank to raise interest rates to 14%, the highest in Asia and the government to cut economic growth targets. The Vietnamese gauge’s drop is the second-largest in Asia after China’s CSI 300 Index’s 60%.
Those declines were part of a global rout fuelled by the deepening credit-market crisis that erased more than US$20 trillion in value from stock markets worldwide this year and prompted government action to stem the slide.
The US, UK and Australia banned short-selling, while China, South Korea and Taiwan ordered government-run companies to step up stock purchases. Russia, faced with imploding equities as oil prices retreat, has halted trading nine times in the past three weeks.
‘Crisis’ Plan
The State Securities Commission and the Ministry of Finance started working on the draft measures more than a year ago, Bang said, declining to say when they will be approved. The draft includes a structure for ministries and agencies to coordinate in resolving any “crisis” that occurs, he said.
Prime minister Nguyen Tan Dung asked the central bank to request commercial banks to review their operations to limit the local effect of the global financial crisis, according to a statement posted on the State Bank of Vietnam’s Web site on October 6.
Category: Stocks
