Is there a hand that controls the stock market?

Tuesday, May 6, 2008
Two months ago, an official from the State Securities Commission (SSC) revealed that it had discovered the transactions by some big institutions that aimed to restrain share prices. He said there was the hand of foreign institutions.

The transactions on the market in the last six months showed that the influence that investors think tries to sway the market, is really existing.

Nevertheless, until now, SSC still has not provided any further detail, including the names and the tricks of the institutions and individuals, as well as the things SSC will do to punish them in order to make the market healthier.

In the last several months, a lot of blue-chip items, including REE, FPT, SAM and SSI were once sold in big volume in a lot consecutive trading sessions at floor prices, which led to the massive sale of these items from small investors, who played the stock market with borrowed money and could not keep shares for a long period.

As a result, the prices of a lot share items plunged dramatically to the prices which were equal to 1/3 of the peak prices seen in March 2007.

An experienced investor said that he believes that some big investors have made use of the bad news like the gold price fluctuations, continued oil price increases, high inflation, the tightened monetary policy and the US economic recession, to force the stock prices down to unexpectedly low prices. Thousands of small investors had to sell shares out massively, and it was the right time for the big investors to buy shares in.

The transactions in the last six months showed that the arguments about the influence that tries to control the market are reasonable.

Most recently, in April 2008, SSC’s inspectors took an inspection tour to securities companies, the members of the HCM City Stock Exchange, where they checked the transactions made at the companies. The inspectors found out five most suspicious accounts out of 300,000 accounts.

These were the accounts which had the biggest transaction value and highest transaction frequency.

In mid April 2008, the second inspection tour was taken, when inspectors tried to find the trails related to an account with abnormal transactions.

The inspectors found out that right before Tet 2007, an individual investor transacted over 1mil shares of the share item listed among the top 10 items that had the biggest market capitalization value (the transactions of the share item were carried out in 3 consecutive trading sessions). After Tet, in 3 trading sessions, the investor sold over 1mil shares of the same share item.

SSC found out that the investor was assisted by a staff from a securities company in buying and selling shares.

A securities expert said that the cooperation among the Ministry of Public Security, Securities Depository Centre and SSC is needed to track down the transactions that aimed to control share prices.

He also said that SSC should ask the Government to raise the punishment on the violations relating to securities transactions. The current low fine levels of VND30-50mil for individuals, and VND50-70mil for violated institutions prove to be too low, not high enough to deter violators. (TBKTVN)