Stronger risk management for stock market required

Saturday, May 3, 2008
Market regulators need better policies and procedures in place to manage crises and emergencies that may arise on the nation’s stock exchanges, the Ministry of Finance said in a decision earlier this week, recommending a project be set up to create and model such policies.
The measure was one of five economic recommendations that the ministry set forth in the decision.
The decision also said that regulators needed to establish without further delay an over-the-counter (OTC) market under the administration of the Hanoi Securities Trading Centre, a step formally approved last year to reduce risks to investors in unsupervised OTC trading.
Regulators also needed to establish detailed criteria for listed companies to offer additional shares, the ministry decision stated.
“These things, although not new, will contribute to giving investors more optimism in their trading,” said Nguyen Tien Dung, an independent analyst. “They should have done earlier.”
Dung said a project to devise responses to market crises and detailed regulation on additional offers were most needed at this time because they would help the market avoid some of the steep declines of the past.
“As of now, the overload of shares seems to be the main reason for the reversal of the exchange. If we had had an obvious plan to solve it from the outset, the market would not have fallen as deeply as it has
The decision also addressed mechanisms for foreign investors as well as management of foreign capital inflows to the domestic exchange.
The decision was regarded as good news for investors during this week’s market holiday.
“The market could rebound early next week thanks in part to this news,” Dung said. “But, whether it can spur the market depends on how long it takes to implement the proposed project.” (VNA)