Vietnam outlines plan to lift stock market
HANOI: Vietnams state investment arm pledged to buy shares in an unprecedented attempt to halt a dramatic drop in stock markets, helping the benchmark index rise the most in almost 19 months Thursday.
The measure was one of a series of initiatives outlined in a Communist Party policy document late Tuesday designed to fight double-digit inflation and restore local investors confidence in a market that has lost about 34 percent this year in a liquidity crunch.
“The plan has psychologically boosted investors,” said Truong Duy Khiem, head of trading at ACB Securities, the brokerage unit of Asia Commercial Bank.
The State Capital Investment Corporation, which has registered capital of 15 trillion dong, or $940 million, had not started buying back shares Thursday, brokers and traders said.
A senior official of the State Securities Commission, the market watchdog, said Thursday that the start arm would “immediately” buy back shares.
“SCICs share purchase is a suitable solution given the current conditions and could provide positive support to the market,” Nguyen Doan Hung, deputy chairman of the State Securities Commission, said in a statement. He did not specify which shares would be targeted or the volume and value of the purchases.
The main Ho Chi Minh Stock Exchange, with a market capitalization of about $16.5 billion, rose 4.8 percent to close at 611.17 points on the announcement, having fallen by as much as a third in the past month.
The smaller over-the counter Hanoi Securities Trading Center, worth $5.3 billion, rose 7.9 percent to 206.49 points.
Domestic retail investors who dominate trading have stopped buying in the past month after a series of central bank directives to banks that dried up liquidity.
The central bank is grappling with policies to reduce inflation that hit 15.7 percent in February, the highest level in 12 years.
State Capital Investment Corporation officials could not be reached, but there was a statement on the organizations Web site saying it was “urgently identifying a list of investment portfolios, size and methods of the investment in compliance with the governments directive for implementation.”
The statement said the move was subject to final government approval and that the site would be updated with information.
State Capital Investment Corporation has a portfolio of about 800 companies and major corporations, both listed and unlisted.
The investments include stakes in the top information technology firm, FPT, the top dairy product maker, Vinamilk, the reinsurance firm Vinare, the construction group Vinaconex and Pacific Airlines.
The Ho Chi Minh Stock Exchange is the worst-performing market in the world this year and has fallen almost three times as much as the MSCI Asia excluding Japan.
