[lbo-talk] ADB warns on Vietnam stocks boom

uvj at vsnl.com uvj at vsnl.com
Thu Mar 29 08:10:36 PDT 2007


Reuters.com

ADB warns on Vietnam stocks boom http://www.reuters.com/article/bankingfinancial-SP/idUSSP10695420070327

Tue Mar 27, 2007

(Recasts with ADB comments, adds index close)

HANOI, March 27 (Reuters) - Vietnam's booming stock market is threatened by domestic investors' lack of understanding and poor regulation, the Asia Development Bank said on Tuesday.

ADB Country Director Ayumi Konishi said the world's fastest growing market (.VNI: Quote, Profile, Research) last year was being driven by domestic retail investors as well as foreign investment coming in.

But he told a news conference it was questionable how many domestic investors understood how equity markets work or could read a balance sheet. "What we're really concerned about right now is the poor level of investor education in the first place, and information disclosure and the surveillance functions of the market regulator," Konishi said.

The authorities have called for better management of the stock market, launched less than seven years ago, and are preparing contingency plans for different market scenarios.

The main VN index fell 3.54 percent on Tuesday, its sixth straight decline, leaving it 11.7 percent below its lifetime high of 1,170.67 on March 12 but still up nearly 38 percent so far this year. In 2006, it rose 144.6 percent.

Anecdotes abound of people mortgaging their homes to raise money to speculate on the market, and everyone from housewives to motorcycle taxi drivers seems to be a player.

Konishi said the long-term prospects for the market are good as the economy continues to expand rapidly, and corrections were only healthy and to be expected.

"The market is like the weather. There are some sunny days and some rainy days," he said. "If the market does not make a correction at all then there's something wrong with the market."

The ADB is projecting GDP growth this year for Vietnam of 8.3 percent, and 8.5 percent in 2008, outpacing developing Asia as a whole, and second only to China. GDP grow 8.17 percent last year.

The ADB's warning came as the authorities stepped up control of unregulated share trading, ordering companies that have sold shares on the grey market to register with market regulators.

Nearly 200 companies are listed on Vietnam's two exchanges in Ho Chi Minh City and Hanoi (.HASTCI: Quote, Profile, Research), and brokers estimate shares in more than 1,000 firms are traded on unregulated markets. The government is scheduled to privatise 550 businesses this year.

ADB officials also said money-laundering was an issue in the stock market and the bank had worked with Vietnam's central bank on an anti-money laundering decree.

"We hope that with the enforcement of the decree and improved capacity of the agency we can somehow reduce money-laundering in the equity market," ADB governance and public-sector reforms officer Dao Viet Dung told the news conference.

(Additional reporting by Grant McCool and Ho Binh Minh) ((Reporting by Jonathan Lynn, editing by Kim Coghill; Reuters Messaging: jonathan.lynn.reuters.com at reutesr.net; +844 825 9623)) Keywords: VIETNAM SHARES/

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