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2008 stock market, taking stock   2009-01-22 - DTCK

Vu Bang, Chairman of the State Securities Commission, in a talk with reporters, not only talked about the gloomy stock market in 2008, but also about his optimism. He believes that the difficulties will make the stock market become more seasoned and experienced.

 

What of the stock market worries you the most?

 

Vu Bang, Chairman of the State Securities Commission

In 2008, the stock market witnessed two big challenges. We had to spend most of 2008 fighting inflation and trying to curb trade deficit. The difficulties of the national economy could be seen in the stock market performance: the stock index decreased, while the capital mobilization through the stock market also decreased by 75-80% in comparison with the previous year.

 

Since the end of September, Vietnam has born the influence of the global financial crisis, which was the second challenge. No one can say for sure when the impacts of the crisis will end.

 

However, many investors think that the sharp fall of the VNIndex, from over 900 points to 300 points within one year, is abnormal.

 

The stock market, which is considered the mirror that reflects the national economy, has been falling. This has happened not only with Vietnam, but other stock markets in the world as well. The Chinese stock market, for example, once fell from 6,000 points to 1,500 points, while it is now staying at 1,800 points.

 

The measures of intervening in the stock market seemed to have no effect on the stock indexes in the last year?

 

The measures undertaken in the previous time mainly focused on reassuring investors and having some influence on the supply and demand on the market. In nature, the stock market bears the influence of the macroeconomy, businesses’ production, and supply and demand. Therefore, measures on macroeconomic stability prove to be the most important factor for the stability of the stock market.

 

The State Securities Commission (SSC) still continues long-term measures to improve the market, as well as perfect the legal framework and market operation structure in order to be ready to receive opportunities in the medium- and long-term.

 

In the immediate time, the commission has built up the project on attracting foreign portfolio investment (FII), suggesting suitable treatment measures. SSC has submitted the anti-crisis project, and it building up several mechanisms

 

Many IPOs ran unsuccessfully in the last year due to the weak demand. But do you still believe that we need to speed up the equitisation process in 2009?

 

If we do not continue the equitisation process, we will not be able to speed up the state-owned enterprise renovation, and will not have valuable commodities to provide to the stock market. I think that we need to pursue the renovation purpose.

 

It seems that the regulation on compulsory share auctioning in equitisation has become out-of-date?

 

Every policy has its time. Previously, the scheme on compulsory share auctioning aimed at the transparency in equitisation and share sales. However, in the current circumstances, we need to have another scheme which allows shares to be sold in a more flexible way.

 

We need to reduce the ratio of shares to be offered to outside investors in order to ensure success and avoid big impacts on the supply. We need to use many methods, including the sale under the negotiation mode to strategic partners. We also need to consider organizing separate auctions for big investors, and the prices defined at the auctions can be served as the benchmark for small investors’ auctions.

 

Some experts compared the 2008 global financial crisis to a tsunami, as it rushed down unexpectedly and heavily. Do you think that the crisis will last for a long time?

 

The crisis is believed to last from one to three years in three rounds. In the first round, it has affected the banks that provide subprime loans with mortgaged real estate. In the second round, it has influenced insurers, beginning with AIG. A series of investment banks have also been affected, including Merrill Lynch, Morgan Stanley, Leahman Brothers. The financial crisis has affected the production sector, leading big groups like General Motor to face big difficulties. In the third round, this has affected commercial banks.



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