Money among the public remains very strong. If the
stock market shows signs of recovery, money will be injected into the
market. In the context of the global financial crisis, Vietnam’s stock
market should put all its faith in domestic investors, said Le Xuan
Nghia, Head of the Banking Development Strategy Department under the
State Bank of Vietnam.


Do you think that the recent sharp fall of the
global stock markets showed investors’ disappointment of the tardiness
of governments in rescuing markets?


Yes, I do. It was necessary to take action very
quickly and strongly in order to stamp out the confidence crisis among
investors.


The tardiness of the US House of Representatives some
days ago and the slow implementation of the bailout plan have both
contributed to the discouragement of investors. Over $5 trillion has
been lost over the past few weeks, which has made the $700 billion
bailout plan seem very faint. The investors’ disappointment has driven
the market down further into the crisis, despite the fact that many
central banks in the world have been trying to pump more cash, slash
interest rates and make strong commitments on deposit insurance.


Sentiment always influences the decisions of
Vietnamese investors. They may leave the market for a long time when
the market falls. How about US investors?


International investors, especially US ones, act in an
opposite way. They run away, but they always look back to see if the
stock prices bounce back. They will come back to the market as soon as
they see signs of recovery. It is because 60% of American citizens have
securities investments and they have experience in the field.


Therefore, we have every reason to believe that once
positive signs of the disbursement of the US $700 billion bailout plan
appear, the market will recover. However, I think that it is not highly
possible that the securities indexes will return to the levels seen
before the crisis.


It seems that in Vietnam’s stock market, much
depends on the happenings in the key markets in the world, especially
the US market. Does this mean that Vietnam is deeply integrated into
the global economy, or this is just the problem of investors’ sentiment?


All kinds of sentiment originate from reality.
Investors’ sentiment reflects their expectations on the wounds of
Vietnam’s national economy caused by the global financial crisis.
Investors think that if the world’s financial system can recover soon,
the damages on Vietnam’s economy would be smaller, and vice versa.


Besides, the stock demand also depends on the
happenings in the international market, the gold and fuel prices, and
the interest rates on key markets. International investors may consider
choosing other investment opportunities or other investment places. Of
course, financial crisis always makes the assets’ values decrease
sharply. Therefore, crisis can bring the big business opportunity, and
securities prove to be the important asset.


Vietnam’s stock market is still in the difficult
period with the VN Index having fallen to 366 points. What do you think
the Government needs to do to support the market?


The stock market is the investment place with the most
risk. In some countries in the world, governments and central banks
rarely interfere the markets even whey they fall or even collapse. It
is because in the countries, stock investment is considered a kind of
risky business, and investors should take responsibility for their
investments. The Government does not have the responsibility of using
the money they get from collecting tax from people to support the stock
market.


Some countries, including Vietnam, are allowed to
provide a limited credit to fund securities investments. The State Bank
of Vietnam has set up the limit for securities loaning: the loans given
to securities investors must not be higher than 20% of banks’ chartered
capital. I think that this is a good provision which helps the
fledgling market develop. However, the central bank needs to strictly
supervise the loaning of small banks.


Many experts now keep a pessimistic viewpoint about the money flow into the stock market. What do you think about that?


It is true that the cash flow into the stock market
has been limited. However, Vietnam’s stock market should not rely on
foreign investors, while it should expect the inner strength.


In fact, the total money among the public proves to be
very big. In the first nine months of the year, while the deposits made
by institutions at banks decreased, the deposits from individuals
increased sharply by 30% over the end of 2007.


People still make deposits at banks as they cannot see
any other more attractive investment channels. If the stock market
shows signs of recovery, while the global markets warm up, a strong
flow of cash will pour into the stock market.


As far as I know, a lot of investors have got
financially ready to join the market as soon as they see positive
signs. The thing the Government needs to do now is to supervise the
market strictly and ensure the transparency of the market in order to
strengthen the confidence of investors.