BTA
16-06-2008, 11:43 AM
The stock market regulator should restore the intraday trading band to five percent to allow the index to recover from its six-month slump, analysts and fund managers said.
The VN-Index of 155 listed companies rose for a second straight day on Friday to close at 372.7 points after falling for six weeks in a row.
The eight-year-old stock market has plunged 60 percent this year, making it the world’s worst-performing index.
The intraday trading band was narrowed to slow the plunge.
But now observers say the limit will restrict any recovery.
“People out there are realizing that they do not need to throw the baby out with the bathwater,” Reuters quoted PXP Vietnam Asset Management director Kevin Snowball as saying last week.
“If the regulators widen the trading band and the timing is right, it [the index] does have a chance to go up.”
Among its latest proposed measures to boost the stock market, the Vietnam Association of Financial Investors suggested the State Securities Commission should set the daily limit that allows a 1 percent fall and a 3 percent rise.
One Ho Chi Minh City analyst, who asked not to be named, said it was time to return to the previous cap of 5 percent.
“After dropping for more than 25days in a row, two days of rising boosts investor confidence,” he said.
“So I think it’s time to restore the previous trading band of 5 percent, which will attract more investors to the market.
The band was narrowed to 1 percent on March 27 and widened to 2 percent on April 7.
The daily trading limit on the Hanoi Securities Trading Center is 3 percent.
Independent HCMC analyst Le Dat Chi said the best way to boost the market’s liquidity was to allow unrestricted matching of buy and sell orders.
“Without a trading band, traders will have to carefully study the stocks they want to buy,” Chi said.
“Removing the trading band and allowing unrestricted continuous matching will enable investors to see shares’ actual value.” At present, buy and sell orders are only matched if the bids fall within the trading band.
But the managing director of fund manager VinaCapital, Andy Ho, disagreed, saying the fledgling stock market still needed a trading band limit.
Ho recommended a return to the previous cap of 5 percent.
Another expert said the trading band should be replaced by some mechanism to automatically halt stock transactions when share prices fall too low.
The VN-Index of 155 listed companies rose for a second straight day on Friday to close at 372.7 points after falling for six weeks in a row.
The eight-year-old stock market has plunged 60 percent this year, making it the world’s worst-performing index.
The intraday trading band was narrowed to slow the plunge.
But now observers say the limit will restrict any recovery.
“People out there are realizing that they do not need to throw the baby out with the bathwater,” Reuters quoted PXP Vietnam Asset Management director Kevin Snowball as saying last week.
“If the regulators widen the trading band and the timing is right, it [the index] does have a chance to go up.”
Among its latest proposed measures to boost the stock market, the Vietnam Association of Financial Investors suggested the State Securities Commission should set the daily limit that allows a 1 percent fall and a 3 percent rise.
One Ho Chi Minh City analyst, who asked not to be named, said it was time to return to the previous cap of 5 percent.
“After dropping for more than 25days in a row, two days of rising boosts investor confidence,” he said.
“So I think it’s time to restore the previous trading band of 5 percent, which will attract more investors to the market.
The band was narrowed to 1 percent on March 27 and widened to 2 percent on April 7.
The daily trading limit on the Hanoi Securities Trading Center is 3 percent.
Independent HCMC analyst Le Dat Chi said the best way to boost the market’s liquidity was to allow unrestricted matching of buy and sell orders.
“Without a trading band, traders will have to carefully study the stocks they want to buy,” Chi said.
“Removing the trading band and allowing unrestricted continuous matching will enable investors to see shares’ actual value.” At present, buy and sell orders are only matched if the bids fall within the trading band.
But the managing director of fund manager VinaCapital, Andy Ho, disagreed, saying the fledgling stock market still needed a trading band limit.
Ho recommended a return to the previous cap of 5 percent.
Another expert said the trading band should be replaced by some mechanism to automatically halt stock transactions when share prices fall too low.