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Widen main HoSE trading band to 10 pct: financial association

By Dat Nguyen   July 14, 2021 | 05:44 pm PT
Widen main HoSE trading band to 10 pct: financial association
An investor looks at stock prices on smartphone at a brokerage in Ho Chi Minh City. Photo by VnExpress/Quynh Tran.
The Vietnam Financial Consultancy Association (VFCA) has proposed that the Ho Chi Minh Stock Exchange’s (HoSE) daily trading band be widened from 7 percent to 10 percent.

The stock market has been growing for 20 years and has become more transparent to investors with the Securities Laws coming into effect earlier this year, and there has been a surge in trade value as investors are equipped with more knowledge and better tools to manage their risks, the association said.

For these reasons Vietnam’s market need to widen its band to match that of the world, it added. A 10 percent band is the same as the Hanoi Stock Exchange and Chinese exchanges.

The VFCA also proposed that the maximum margin (amount an investor can borrow from a brokerage over and above his/her principal investment) be increased from 50 percent to 70 percent to help the market become "more vibrant."

As the government wants to use the stock market as a channel for mobilizing capital, more regulations are needed to improve exchanges and brokerages’ platforms to international standards, like using bilingual user interface and applying International Financial Reporting Standard.

The association also proposed that the government gradually increases the foreign ownership cap in some sectors like petrol (currently 35 percent) and banks (30 percent) to over 50 percent so Vietnamese companies can rise to international standards.

However, voting rights should still be dominated by local shareholders so that foreigners won’t dominate sensitive sectors, the association said.

Despite the national economy being a global bright spot, the valuation of Vietnam’s stock market remains low, the VFCA said. It also said that the benchmark VN-Index could reach 1,500 points by the end of the year.

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