Vietnam to cut minimum trade size
Exchange aims to attract more smaller investors
Vietnam’s stock market plans to reduce the minimum number of shares in each trade early next year as it seeks to attract more small investors to the 2 1/2-year-old Ho Chi Minh City Securities Trading Center.
The proposal will reduce the minimum trade to 10 shares from 100 shares, the minimum since the market opened in 2000, said Phan Thi Tuong Tam, deputy director of the exchange.
'It's as if the regulators are enacting a huge market share split, which broadens the potential client base,' ACB Securities deputy general director Jonathon Waugh said. 'It's significant in that they're trying to get more people into the market.'
Regulators are seeking to boost confidence in the exchange following a 68 per cent drop in the VN Index to 183.56 from its June 2001 high of 571. The index rose 2.4 per cent yesterday, with every listed stock increasing.
The market also plans to widen its trading band next year, allowing stock prices to increase or decrease as much as 5 per cent a day, Mr Tam said. The limit was widened on Aug 1 to 3 per cent from 2 per cent. The band has been as wide as 7 per cent.
'(Yesterday's) strong rise was probably attributable to this latest proposed change of rules,' Mr Waugh said.
The reduction in the minimum share purchase is meant 'to create conditions to enable small investors to join the market,' Mr Tam said. 'The market now is relatively quiet. We hope the new decision will make it busier.'
The average daily volume of shares traded on the exchange was 70,932 shares in October, 25 per cent less than in September, the exchange said. The combined market value of the market is 2.52 trillion dong (S$300 million).
The reduction in the minimum share purchase may encourage the entrance of investors who do not understand the market and who will be less able to afford trading losses, said Tran Quyet Thang, general director of Saigon Securities Inc.
'The market needs educated investors,' Mr Thang said 'A stock market in its early days can be quite a rough place.'
The State Securities Commission, the regulator, said last month it may allow banks and foreign companies to list and may introduce tax incentives for stock-exchange investors, companies and brokerages.
The market has 19 listed companies, up from two when it opened. Overseas investors may own no more than a fifth of the stock in most companies and now own 11 per cent of all of listed stock, said ACB Securities.
Bloomberg - December 5, 2002
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