Some traders call for stock market ‘time-out’

Thursday, May 15, 2008
With the VN-Index now dipping below 500, and seemingly no end in sight for its long downward plunge, some investors are calling for a temporary suspension in trading or some other form of official intervention to stop the haemorrhaging.

"I think the regulators should pause trading on the stock exchange for several days because what is happening is making the general situation worse," said veteran Ha Noi investor Hoang Tuan.

Ngoc Cuong, an investor with Habubank Securities Co, said, "I’d rather see that than watch the VN-Index keep falling day by day."

A delay in trading could help investors cool off and give them a chance to reconsider their investment portfolios, Tuan added.

In fact, investors had a brief time-out during the public holidays in late April and early May, when the market went dark for several days.

But, when traders returned from the holiday, the VN-Index continued falling.

"The delay should be a half a month, not only a couple of days," countered Tuan. "The time must be calculated to give enough time for a calming down period."

Get on with it

Other investors took a different tack, suggesting that measures such as a trading suspension or tightening the daily trading band simply delayed the inevitable.

"Sooner or later, the VN-Index will be back to 300 points," said one investor at the offices of Habubank Securities Co. "Tightening the trading band only stretches out the time over which the market falls."

However loosening the trading band on the HCM City Stock Exchange back to the previous plus-or-minus 5 per cent per day spooks many individual investors who have seen the greatest suffering during the free-fall of the VN-Index.

Nguyen Tien Dung, an independent analyst, said, "Domestic investors now have nothing to do with the stock market. Instead, they keep mentally putting themselves in the positions of regulators."

The VN-Index was falling heavily partly due to the investors themselves, he said. They have acted in panic, causing an even greater imbalance between the share volumes and capital inflows.

"And when the market falls too much, they wait for regulators to do something, rather than taking greater care of what they are doing," Dung said.

"Instead of calling for more help from regulators, they should calm themselves down.

"Then, they might escape from the mud."

Active buying

VN-Index yesterday continued its downward trend, slumping another 1.74 per cent or 8.42 per cent to close at 475.5.

Active buying by foreign investors gave a small lift to total trading volume, which reached 1.9 million shares. Value of the day’s trades totalled VND82.62 billion (US$5.16 million).

Petroleum Mechanicals (PMS) was the day’s only gainer, with nearly all other codes hitting their floor prices.

Among some leading blue chips, Hau Giang Pharmaceuticals (DHG) fell 1.81 per cent to VND168,000, and Kinh Do slid 1.85 per cent to end the day at VND108,000.

Kim Anh, a broker with the Golden Lotus Securities Co, said domestic investors have become too panicked to realise what they are doing and were now feeding the steady fall of the VN-Index.

Only foreign investors have retained any enthusiasm to buy shares. Yesterday, they were active buyers of a net of 676,410 shares, representing a value of VND35.33 billion (US$2.21 million).

Nguyen Huy Duong, an analyst of Hoa Binh Securities, said that foreigners have gone through hard period on other stock markets and understood the patterns on the Vietnamese bourse.

"Foreigners continue to realise that Viet Nam is a really attractive destination for their investment despite the economic difficulties," said Duong.

On the northern market, the HASTC-Index closed off 2.04 per cent to 144.85. Gainers included penny stocks like Luong Tai Construction (LUT) or Yen Bai Agri-forest&Food (CAP).

Duong noted that, on the Ha Noi market, the trading band was a percentage point wider than in HCM City, allowing day traders to earn a little more than they could on the southern market.

However, trading volume in Ha Noi continued modest, at only 272,300 shares, with a value of VND10.35 billion ($646,875), concentrated mostly in penny stocks. (VNS)