India | UK | US

Vietnam may relax curbs on lending to buy stocks

Posted : Tue, 22 Jan 2008 10:31:00 GMT
By : DPA
Category : Business
News Alerts by Email ( click here )
Business News | Home
Hanoi - To fight the recent drop in Vietnam's stock market, the country's State Bank may allow commercial banks to lend more money to clients to buy securities, Vietnamese banking officials confirmed Tuesday. Vietnamese investors have complained that a new State Bank regulation limiting lending against securities to 3 per cent of a commercial bank's deposits, which took effect December 31, has contributed to the fall in the country's stock market.

The VN Index has lost 12 per cent of its value since the start of the year, falling from 907.07 on January 2 to a low of 807.74 at Tuesday's close.

The drop comes amid steep and widespread declines in the values of indexes in Asia and around the world, but Vietnamese investors have been quick to blame the new domestic regulation.

"Since Instruction Number 3 was issued, the stock market has become noticeably less busy," said Duong Thu Huong, general secretary of the Vietnam Banking Association, referring to the new regulation. She said many banks had complained that the 3 per cent limit was not "scientific."

"It'd be better to completely ban [lending against securities] than to create a mechanism that depresses the market," Huong said.

The State Bank issued Instruction Number 3 to restrain speculative lending and to prevent a fall in stock values from damaging the country's banking industry.

On Monday, the Vietnamese newspaper Thanh Nhien quoted State Securities Commission chairman Vu Bang as saying that loans against securities dropped from 1.9 billion dollars to 811 million dollars after the new restrictions took effect.

But other investors said the restrictions were not responsible for the market's decline this year, and that other factors were more important.

Andy Ho, managing director of asset management group VinaCapital, said any effect the regulations had on the market would have been seen only before December 31, when borrowers had to liquidate excess holdings to comply with the 3 per cent rule.

Ho said the regulations had contributed to the market's softening before December 31, along with other factors, such as the high initial share prices in the equitizations of large state-owned companies, particularly the highly touted initial public offering of Vietcombank in December. The high initial share price left little room for profit for early investors.

That, in turn, led investors to turn to the real estate market, where properties have shot up rapidly since December.

"When people saw how much money could be made in real estate, it's like the penguin effect," Ho said. "One person goes, and everyone else follows." The hot real estate market has weakened demand in the stock market.

The stock market's decline is due to "many other factors, including the general trend of stock markets in the world," said Nguyen Duy Hung, general director of Saigon Securities Inc. "We cannot blame this regulation for the current situation of the market."

Ho said moves to loosen the restrictions would not necessarily give a boost to the market.

"If the investors feel bullish, they'll go out and borrow," said Ho. "But even if you lift the limit from 3 per cent to 10 per cent, or to 20 per cent, if investors don't feel bullish, they won't borrow money."

Copyright DPA

Share/Save/Bookmark

Article : Vietnam may relax curbs on lending to buy stocks
Print this article
Email this article

Stay Updated
News gadget on your Google homepage
Subscribe to a news feed in Google Reader


Related News

Editor quits China's top finance magazine
Beijing - The editor of China's top financial magazine Caijing has resigned to take an academic post, officials said on Monday, amid rumours of a rift between senior staff and the magazine's owners. Hu Shuli left Caijing after weeks of speculation an...

Singapore's central bank warns of escalation in property market
Singapore - Singapore's central bank on Monday said that more measures might be needed to counter speculation in the city-state's property market, as there was a risk of an escalation. As Singapore emerges from recession and with the market expectin...

Czech jobless rate falls slightly to 8.5 per cent
Prague- The Czech Republic's unemployment rate fell a notch, to 8.5 per cent, in October, down from 8.6 per cent the previous month, the Ministry of Labour and Social Affairs said Monday. The slight decline, however, does not signal an end to the eco...

Thai shares up 2.13 per cent on Moody's upgrades
Bangkok - Thai shares jumped 2.13 per cent Monday on a return of investor confidence in the region, brokers said. The Stock Exchange of Thailand index ended at 713.48, up 14.85 points. ...

South Africa first female central banker begins work
Johannesburg - South Africa's first female central bank governor, Gill Marcus, began work Monday. Marcus, 60, is a former deputy governor of the bank and former deputy finance minister as well as ex-chairwoman of Absa, South Africa's biggest retail b...

Allianz shares surge on the back of forecast-beating Q3 profit
Frankfurt - Europe's biggest insurer, Allianz SE, surged by about 5 per cent Monday after the group reported a bigger-than- forecast jump in third-quarter profit. Munich-based Allianz said net earnings rose to 1.323 billion euros (1.96 billion dollar...

Up to 200,000 Lao labourers working in Thailand
Vientiane - An estimated 200,000 Lao labourers are working in neighbouring Thailand, of whom 120,000 are working there legally, state media reports said Monday. According to Skill Development and Employment Department Director General Phouvanh Chanth...

Have your Say
Name
Email
Subject
Your Comment

Enter Verification code
 
  

 

 

More Business News click here
Follow The Earth Times
Subscribe to RSS Follow Earth Times on TwitterNews by email
Share/Save/Bookmark

 
 



 
Subscribe to free Earthtimes
News Alerts by Email Click here
For RSS Feeds Click here
or Create your own RSS

Add to Google Toolbar
Breaking News
Press Releases

 


The Earth Times
News Category

© 2009 www.earthtimes.org, The Earth Times, All Rights Reserved | Privacy Policy
Earth Times accept no responsibility or liability either directly or indirectly for views or opinions expressed in articles or comments.