It is essential to curtail over 70 weak securities companies, said the Chairman of Ho Chi Minh City Stock Exchange (HoSE), Tran Dac Sinh.
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| Chairman of Ho Chi Minh City Stock Exchange (HoSE), Tran Dac Sinh |
Sinh said, with Vietnam's current market size, it should only contain about 30 securities companies instead of the current 105.
Most of the companies were established under the growth during the economic bubble in the Vietnamese securities market, but had a weak capital base and bad management. Once the economic slump hit their shortcomings were exposed.
Though the State Securities Commission, under the Ministry of Finance, issued a number of directives to ensure the firms' safety, Sinh said weak firms should be eliminated, adding that with a simpler stock market, management agencies will be able to do their job better.
In the plan to boost the domestic stock market, HoSE is now studying exchange-traded funds (ETF) and covered warrants. Sinh said he is waiting for the regulations and directives on how to set up ETFs. They will also send their study on covered warrants to the State Securities Commission for approval early next year.
Currently, VN30 is the strongest index in the market. It makes up 70% of market capitalisation, 80% HoSE's market capitalization and, they hope, will attract many investors.
The State Securities Commission is planning to raise the margin lending ratio from 40% to 50% to stimulate the market. Sinh said the solution is good but Government should carefully consider all implications before implementing any policy.
