Investors urged to ignore market rumours
(VNS) Misleading rumours have spread like wildfire on the stock market, with a considerable negative impact on investor attitudes and share values. The director of the State Securities Commission's market development department, Nguyen Son, spoke to the Vietnam News Agency about measures planned to crack down on parties who spread false information.
|State Securities Commission's market development director Nguyen Son.
What impacts have false rumours had on the stock market?
The appearance of rumours in a stock market is unavoidable. Psychological factors, especially the herd mentality, have a huge impact on a market as fragile and sensitive as Viet Nam's which still has a short history in operation.
Information plays a decisive role to the decisions of investors and financial managers. Incorrect or late information can cause investors to make incorrect analyses.
Experiences over the past 12 years have shown that stock market fevers have occured partly due to the impacts of incorrect rumours which have influenced the psychology of investors who otherwise lack market information. What information there is becomes overvalued.
What are the motives for spreading false reports?
The main motive is profit. Rumour-mongers target investors with litte market information who are psychologically vulnerable. Some investors act wrongheadedly based on rumours and the rumour-monger exploits that. Some are simply motivated to knock down their opponents.
Many investors say that it is difficult to get access to official information when markets and companies are encountering difficulties. How will the State Securities Commission increase the sources of reliable information?
The commission uses a financial safety ratio as set forth in Circular No 226 to evaluate and classify enterprises based on normal or weak performance or enterprises requiring special supervision. This information is then provided to investors for them to consider in making investment decisions. The group of enterprises requiring special supervision would be monitored by regulators for a certain period of time to see if they can raise their ratings on the most reliable indices.
What more will the commission do to ensure market transparency and promote trust in investors?
Supervision of stock market is being enhanced. The commission is also asking companies to issue timely corrections when false or misleading information about them is circulated. False rumours must be corrected within 72 hours.
Administrative agencies must also gather information from stock exchanges and the State Securities Commission and order explanations or corrections as needed to reassure investors.
Rumours have recently mushroomed, for instance, related to some bank takeovers and the prosecution of some individuals. Some have taken advantage of this information to undermine the market in their own self-interest.
So, the commission has joined with the mass media to spread correct information to investors and has supported the Ministry of Public Security during its investigation.
What can investors do to access more exact information about the market?
Investors should make sure information has been provided by formal sources such as specialised organisations or State administrative agencies. Investors should check the reliability of information before making investment decisions by consulting agencies and avoiding information from informal sources such as personal websites.
Official websites of the commission and stock exchanges are updated throughout the day to provide adequate and timely information about the operation of the market. Meanwhile, the laws to penalise false rumours will be tightened. — VNS