Finance minister: VN won’t sacrifice stock market

Wednesday, May 21, 2008
Shares are selling at any price, and the VN Index dropped dramatically to below 450 points, the deepest low since November 2006. Meanwhile, Minister of Finance Vu Van Ninh still affirms that Viet Nam will not sacrifice the stock market to restrain inflation.

The bad performance of the stock market makes people worried that it will collapse in a day or two. What are your thoughts on the market?

Share prices are decreasing, but if you consider the P/E index, you can see the investment opportunities: I mean the prices will recover. Many enterprises have revealed information about their business results, which shows that they still could get good profit despite the difficulties. In general, the factors show that the market remains full of potential.

The problem lies in the fact that investors, especially small individual investors, have become easily puzzled, trying to sell shares in big quantities, which has made the market worse.

I can say that our stock market is full of potential, especially long-term investment opportunities. Foreign investors also think this way, which explains why they still keep buying.

How much longer can domestic investors, the small individual investors as you said, stand the market’s falls?

It depends on investors’ capabilities. Investors who make investments with borrowed capital will meet with big difficulties while investors who make investments with their own money will not bear the pressure of paying debts.

Some analyses say that most of the capital injected in securities comes from loans.

It is really difficult to talk about sources of capital as we don’t have reliable statistics about that.

The government has been taking a series of drastic measures to rescue the stock market. Why has the market not shown any signs of recovery?

As I said above, the market is being influenced by many factors. In fact, the measures can only have certain impacts on the market, while they can’t rule the market.

We have injected money to rescue the stock market, but it seems that that measure has not brought the desired effects. Surely the state cannot continuously pour money into the market.

The state’s intervention in the stock market aims to calm investors down. Don’t think that the state needs to spend money to buy all shares to rescue the market.

Regarding the suggestion to widen the daily trading bands, I don’t think this is the thing we need to do now. If we do that, the market will drop more sharply.

How do we harmonise the tasks of restraining inflation and rescuing the stock market? Which task is the top priority? Will we have to sacrifice one of the two to gain the other?

Fighting inflation is the top priority task nowadays, as inflation has impacts on the national economy as a whole. However, the stock market plays a very important role in the national economy. Viet Nam will not sacrifice the stock market to restrain inflation.

Of course, when we take some measures, the measures will affect the stock market. But we aren’t sacrificing the stock market as this would bring about bad consequences.

What additional measures will the government take to rescue the market?

The most important thing we need to do is to make investors calm down. If investors are not cooperative, no measure can help. (VNN)